Skyrocketing debt, surviving on minimal salaries, incapable of handling life emergencies, struggling to pay for an education years after graduating, and ill-equipped to retire. These are true statements for millions of people across the country. As a parent, however, this is not a future you want for your children.
Knowing the struggles you’ve been through and experienced, it’s only natural you’d want better for your children. Essentially, that means providing a solid foundation that sets them up financially for a more successful future. If you’re interested in securing your child’s financial future, this advice can help you get started.
Be An Example
The do as I say and not as I do concept doesn’t really work in parenting. Your children see your financial habits and essentially believe that this is a “way of life”. If you want your children to be responsible with money, it means being responsible as well.
To set a positive example, you need to start by cleaning up your finances. Review the debt you currently have and compare it to your budget. Then, set up a payment plan to get back on track. Dispute any errors on your credit report and try to negotiate smaller settlement amounts for your collection or charge-off accounts.
Once you’ve cleaned up your finances, your children need to see you using money and credit responsibly. Start saving money for rainy days. Make wise investments like solar loan credit union offer to make repairs on the house and repay the loan in a timely fashion. Also, pay your bills on time, use credit cards responsibly, and have healthy conversations about money.
Open a Savings Account
People fall into debt because they don’t have the means to pay for things they want and need. To avoid this, it is important that you learn how to save your money. This is a financial concept you can teach your children early on that will set them up financially. Open custodial savings account for your children and make weekly or monthly deposits.
When your children are old enough, allow them to make the deposits with you and review statements to see how the interest accrues. You can also help them in creating savings goals to get things they want. For instance, if your son wants a gaming console, show him how to save his money until he gets the game. This teaches him the importance of being smart with your money to get nice things as opposed to always looking to borrow the funds.
Open an Educational Savings Plan
Student loans are at the top of the list of financial trouble for people across the country. Paying for a decent education can cost tens of thousands of dollars each year which most don’t have. Then, it can take graduates decades to repay the debt in full. You can relieve this financial burden for your children by opening an educational savings account. Having an account exclusively for future education for your children reduces or eliminates the amount of money they’ll need to borrow (and repay) for college.
Talk to Your Kids About Money
Financial literacy is not being taught nearly as much as it should be in schools. Children go out into the real world with no concept of how to manage their money. In turn, they end up in debt and struggling to get by. As a parent, you can break the cycle by educating your children yourself. Talk to them about the importance of managing their finances, how to be responsible with credit, and ways to save. You can give them an allowance and teach them about saving a portion. You can also allow them to help you with the budget, paying the bills, or going to the bank.
When your finances are out of whack, it can impact every aspect of your life. In fact, money is commonly a factor in divorces and mental health issues. To prevent your children from going through the same struggles it is imperative that you begin taking the necessary steps to secure their financial futures. By starting with the advice provided above, you’re putting your children in a better position to be financially responsible adults which essentially leads to a more fulfilled life.