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dollars & sense

Your Children are your BIGGEST INVESTMENT Help Them Achieve  FINANCIAL SUCCESS

With the government spending money it doesn’t have, with credit card companies encouraging consumers to buy now and pay later, and with most Americans living paycheck to paycheck, it’s no wonder our children are failing financial literacy tests.

Most parents do not talk to their kids about money management. Our children are learning from the kid down the street, from advertisers fighting for their attention and from credit card companies with free Frisbees and t-shirts. If parents do not take charge of who teaches their kids about money, statistics show kids will follow the path of living paycheck to paycheck, stressed out and debt-ridden. Sound familiar?

“Money management is so simple, and when you start early, you can secure a child’s financial future,” says Lori Mackey author of Money Mama & The Three Little Pigs.

“There are 1,001 money-management books for adults but not one for kids,” says Mackey. “If we would have been taught money management as a child we would not need these books as adults.”

Financial literacy principles are very simple: pay yourself first, give back and live beneath your means. According to Mackey, everyone should learn four important financial lessons: give, invest, save, and spend wisely.

Start your kids off to financial security using Mackey’s concepts:

Talk to your children about money in a non-threatening way. Open the conversation and ask them what they think of money, what it does, its uses and what it is good for.

Explain to your children that financial fitness is as important as physical fitness. Mackey uses the 10/10/10/70 concept. Children should give away 10 percent of their earnings, save 10 percent, invest 10 percent and spend the remaining 70 percent wisely. “When you teach a child to give, they learn compassion,” Mackey says. “When they understand investing and saving, they can have control over their future. When they experience living beneath their means, they learn how to make choices in life and become responsible.”

Open a savings account for your children so they can create positive habits of saving long-term and watch their money grow and compound.

Pay them an allowance or give them extra chores so they can practice the 10/10/10/70 concept and understand how you receive payment for services rendered. Allow them to earn money so they can value what they have earned.

Always have them spend their own money on the items they want and need. Nothing’s better than when a child says, “But I don’t want to waste my money!” Children will not spend their money nearly as fast as they will spend your money.

By following a few key concepts you’re investing in your children’s future; and, they’re counting on you to help them along.

Courtesy of FeatureSource