Parents have a responsibility to teach their children much about life. One of the most important things is to teach your child about economics, money and saving. When you teach your child a little money in a timely manner, he or she learns the benefits of budgeting and investing and knows how to spend money prudently.
Young people with payment defaults
Unfortunately, many people have not learned these skills early enough, and therefore may face payment problems at a young age. There is a rise in payment defaults on young people, and today about 20% of young people have defaults.
To prevent this, it is very important to teach your children to manage their finances and finances in a timely manner. Here are eight important tips that kids should know about money:
Credit is not free money
Show your child the responsibilities of using a credit and credit card. Nowadays you can get a credit card fairly easily, and you can also get a parallel card for your child. However, a credit card can quickly run into debt if it is not used properly.
Loan and interest terms can be difficult to understand and should be explained to a young person when relevant, as they may not be familiar to many.
Also when borrowing, it is good to look at the total cost, not just the individual cost items. You can easily do this in our comparison:
Patience is a virtue
The sooner a child learns to be patient and can look at things in the long run, the better. Raising the interest rate is a good example for a child: when you deposit money in a savings account for a longer period of time, you get a comfortable interest rate in the deposit within a few years.
When the child learns early that patience and waiting are worthwhile, he will know this in the future.
Money does not grow in the tree
Don’t give your child everything they want too easily. On the contrary, let your child feel what he or she feels like getting what he or she wants after working on it. Weekly money teaches your child budgeting and saving. The child learns to make a little decision about how to spend his or her own money and make choices because the weekly money is not enough for everything. Teach your child that money must be obtained before you can buy something, not with money borrowed in advance.
Should the child be paid for doing his homework? It is important for the child to learn how to work, but be careful where to draw the line – what homework is paid weekly and what chores you have to do anyway. The fading frontier can cause problems, because children may no longer be willing to do normal home chores for free if they are already used to making money from them.
Save money for more than one purpose
Encourage your child to save for more than one purpose – In addition to a current account, it’s a good idea to set aside money for at least one additional account, for the future, or for something a little bigger.
Not only does it save you a little money on your running account, but also, for example, for a holiday or hobby, it teaches you budgeting for the future.
Make a habit of saving
The next time your child gets money from grandparents, for example, make sure he or she puts at least some of the money into the savings, and don’t use it all at once. Also, teach your child that comparing different stores can save you money and not always buy in the first place.
You can easily get a product for a cheaper comparison, or if you buy it a few months later when the price has dropped slightly. Children learn to compare, they will save on almost every purchase in the future.
Money is a way to achieve goals
Help your children develop a healthy attitude towards money. Money gives you freedom and opportunity, which is not the same thing as happiness. A good financial situation creates freedoms and opportunities, and an empty savings account limits opportunities.