Learning how to handle credit cards and debt is one of the most valuable lessons for many young people today. Unfortunately, many people in our country teach their children very little about credit cards. The result is a generation of young people who have no idea how to deal with them and thus accumulate credit card debt. Fortunately, parents of young children have several places to turn to get advice on what to teach their kids about credit cards. There are a variety of books, websites, and programs which have sprung up to help parents with this difficult subject. While the exact method that your family uses will depend on many factors, here are a few basics that every parent should know.
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Lukas Furlan loves hockey. And he loves to play with high-end gear. Last fall, when he was shopping for a hockey stick with his father, the two didn’t see eye to eye on the budget. Dan Furlan, a lawyer who grew up in a modest bungalow in Scarborough, thought $100 was generous. Lukas, age 14, however, had his sights set on a state-of-the-art Kevlar-wrapped carbon stick, for a distinctly immodest $300.
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The United States Mint H.I.P. Pocket Change™ Web site has seven areas: Games, Toons, Coins and Medals, Coin News, Collectors Club, Mint History, and About this Site. You get to them by clicking on the coin icons lined up on the left side of each page.You can use the Kids Guide to see lots of the site’s features at once, and find out what each one is like. You can also get to the features through the site map, but here is a brief description of what each section has to offer:
Welcome to FSI: Fraud Scene Investigator, an online interactive investor education program that teaches and empowers students howto detect and stop a million-dollar investment fraud and put the mysterious con man, “Mr. X,” behind bars. Through this free resource, students will learn how to research companies and understand the warning signs of fraudulent investment pitches. Play now.
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Occasionally the super-rich behave just like us: Camouflaged in the trappings of normal human beings, some live conservatively, keeping their lavish gestures to a minimum. But sometimes the well-heeled members of society wear their status on their sleeves: By pulling up to five-star hotels in their Bugatti or jet-setting to Paris for the weekend they have us believing that we’d be happier too with that kind of money.
But before you buy into the mystique, remember “there’s a cost to having money,” says Californed-based lawyer Richard Watts and author of Fables of Fortune: What Rich People Have That You Don’t Want. His book – which challenges the myth that greater wealth is synonymous with greater happiness – is the byproduct of more than three decades working as a “keeper of secrets” for some of the wealthiest families in the U.S.
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“When I became a man, I put aside childish things.“
Between the carefree days of childhood and the many stresses of independent living, there’s an extraordinary no-man’s land called ‘the teenage years’. Handled the right way, these years can provide the ideal forum for your children to ‘put aside childish things’ and get ready for the grown-up world.
In the modern world, of course, managing your finances is a major part of maturity. So how do you actually teach your kids to budget before they fly the nest? These five steps might not transform your offspring into budgeting geniuses – but it’s good to start with the basics…
Step 1: Introduction to Budgeting
Give your teenager a fixed allowance. Help them figure out what they’ll need to do with it: if they want to buy music, games, and clothes, and still finance some kind of social life, get them to think about how the available funds need to be split up.
Everyone’s different, so that might involve a few separate piggy banks or a spreadsheet on a PC – the important thing is that they learn to see their spending in terms of categories.
(Of course, you don’t need to introduce this ‘division’ idea straight away. You might choose to let them make a few mistakes first, then come in with a solution once they’ve discovered the frustration of running out of cash.)
Step 2: Decision-making
Let your teenager make their own decisions about spending. Simply being responsible for their own cash can really open their eyes to the difference between ‘want’ and ‘need’.
Once kids realize that they can buy Shirt A and go out for an afternoon with their friends and have some money left over – or buy Shirt B and have no money left until the end of the month – they’re likely to see prices in a different light!
Step 3: Opportunities
Give them the opportunity to earn a bigger allowance. You might suggest extra chores they could carry out, or increase their ‘hourly rate’ if they learn to do a better / faster job.
The trade-off between spare time and spare money is something they’ll have to get used to in adult life, so let them figure out how much effort they’re prepared to put in to get the things they want.
Step 4: Introduction to Real Life
If you feel comfortable with your kids knowing the ins and outs of your finances, why not show them a real budget? Show them how little of that seemingly impressive ‘income’ figure is left over once the ‘outgoings’ have soaked up their share.
They might be dismayed when they see how many expenses there are (and how much they add up to). They might also be encouraged to work harder at school if they understand how important it is to get ‘income’ as high as realistically possible!
Step 5: Learning from Mistakes
Once they’ve grown up and left home, they’d better not expect their boss to give them more money just because they’ve spent their salary too quickly! It might sound harsh, but be prepared to say no if they come asking for more. It’s a tough part of parenting, but as they say, the more you help them…
You could offer to go through their finances with them and figure out where they’ve gone wrong (even if the offer’s met with a sullen silence). You could offer them a loan, but make them commit to a repayment plan. After all, that’s how real life works – and preparing for real life is a huge part of what the teenage years are all about.
There are professional services out there that can help adults manage their money better, including different types of current account. For example, there’s the two-account system you can read about at http://www.thinkbanking.co.uk/account/current-account/, which can help people in the UK budget and get their bills paid on time.
Once your teenager has grown up, they might decide it’s worth paying for professional help with their finances – or they might decide to check out how the professionals work and see what they can learn to do for themselves. The more you can teach them about budgeting and money management while they’re teenagers, the better equipped they should be to make that kind of decision in later life.
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When Toronto born Nancy Phillips became a mother in 2002, she began focusing on teaching her children the skills they would need to thrive in our rapidly changing world. Just before her eldest turned five, she began searching for a comprehensive book series that would teach her children important lessons about personal finance and goal setting. Although many of the books she read had excellent information, it was generally directed towards adults not children. This led to the creation of The Zela Wela Kids™.
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