Set a regular schedule for family discussions about finance
It can be used as a special time when children add up their savings and receive interest.Other discussion topics can include the difference between cash, checks, and credit cards; wise spending habits; how to avoid the use of credit; and the advantages of saving and investment growth.
With teenagers, it can also lead to discussions about what's happening with the national and local economies, how to economize at home, and alternatives to spending money. All of this practice will become useful as they get older and take on more responsibility for their own finances.
Use media products as examples
Commercials on TV can lead to productive discussions about how a product works and will it really do what is claimed. Is a price offered truly a sale price? Are alternative products available that will do a better job, perhaps for less cost, or offer better value? Remind them that if something sounds too good to be true, it usually is. Proper management of their money means making wise decisions as to what they buy or do not buy. Do they really need that product? Can they get it cheaper somewhere else?
Discuss the reality of borrowing and paying interest.
If you charge interest on small loans you make to them, they will learn quickly how expensive it is to rent someone else's money for a specified period of time. For instance, paying for a $499 TV over 18 months at $31.85 a month at 18.8 percent interest means the buyer really pays about $575.
Teach your child how credit cards work
Use every opportunity to explain to children how to verify the charges on a bill or receipt and how to guard against credit card fraud. Help them to understand that the credit card is not free money. It eventually has to be repaid. Make it clear to them that you monitor your statement for unjustified charges and question each entry. Describe to them how dishonest people sometimes can get the card number and make charges without your permission.
Discuss credit card dangers when going off to college
The credit card message to holders is to spend money. Some college students report using the cards for cash advances and also to meet everyday needs, instead of for emergencies. Before allowing your child to have a credit card, discuss with them exactly what it is to be used for and the consequences if not used wisely. Many students find themselves having to cut back on classes to fit in part-time jobs just to pay for their credit card purchases.
Kay Hedges is the author of tips and advice to parents who would like to teach their child to save money. Saving money is a habit that can be instilled in a child at an early age and forms the basis for other positive attributes as the child grows.
No comments:
Post a Comment