Picture it: Your 28-year-old son stops by with a “proposal” for you. He reveals he is two months behind on his rent, has maxed out his credit cards and is behind on the minimum payments, and cannot make the payment on the car loan you co-signed for him. His plan is to move back home to figure things out, or he says, you can lend him the money to catch up.
No one wants this scenario to come true. We want to raise money-smart kids. With a combined effort starting at an early age, we can prepare young adults entering the workforce with a basic understanding of budgeting, debt, and savings. Creating a foundation, putting good habits in place early, and continuing to build upon them throughout their childhood is easier than trying to undo bad habits later. Service Credit Union is committed to financial wellness and has youth programs that present high-quality straightforward concepts for making good financial decisions that will be beneficial throughout their lives.
Start at an early age by introducing the difference between needs and wants. Children do not earn and spend money in the same scope as adults; nonetheless, they do deal with receiving and using money at an early age. Ask yourself, what are your children spending money on now? Where are they getting it? Raising money-smart kids might seem challenging, but it is possible and can be rewarding.
For younger children, Service Credit Union has partnered with Money Mammals™ in an outreach effort to parents and communities to encourage being money-wise in a fun and interactive way. The value of money is promoted through “Share, Save and Spend Smart.” Help your children develop strong money habits by encouraging them to make choices with their allowance and monetary gifts. Save and Spend Smart develops savings habits with delayed gratification. This can be a challenge since immediate gratification is more exciting than deferred gratification. Setting saving and money goals can make it more exciting and fun. In the beginning, start with small goals for young children, so they are able to effectively reach their goal and feel achievement. As they become more aware of the value of money, set up longer-term goals to show them there is a commitment and they need to plan for saving for those goals. They will need to determine if the commitment is worth it. This decision prepares them to make good fiscal choices in the future. Another financial concept is sharing which introduces the choice of charitable giving.
With your help, your children will continue to build upon money-wise skills. A great way to build money responsibility is for them to start earning their own money through a part-time job or taking on more complex chores for income. Have them start a basic budget with their earned money. Teaching budgeting skills will help your child better manage their money when it really counts. They will be able to decipher the difference between needs and wants, with bigger purchase items such as laptops and cars. They might need these items but may conclude that even though the more expensive versions are the more desirable, the less expensive versions fit in their budget and are just a reliable as the more expensive ones. Their money management skills are evolving.
Taking the time to construct the foundation for financial wellness throughout the years of childhood will encourage money-wise habits. Having them understand the basics of budgeting, debt and savings will hopefully avoid the scenario of your 28-year-old son’s proposal. Our youth will be on the road to becoming financially well-informed adults.