If your child is a teenager or young adult, they will be out on their own in no time, having to make everyday decisions that will potentially impact the rest of their life.
Whether we like it or not, finances play a significant role in our lives success and overall quality. If your child doesn’t learn how to manage their finances, they could end up struggling with unnecessary obstacles through adulthood and beyond.
As a parent, you can help them lay a solid foundation for a flourishing life — and here are some tips from NieCat Life Coaching to show you how.
Organizing a Budget
No matter the age, every person should know how to create and stick to a budget. Morgan Stanley notes that it just so happens that young consumers are less likely to keep up with their spending than any other age category. And nothing is more critical than possessing basic budgeting skills when finances are tight, not to mention that having such skills can help a person maintain flexibility and freedom with their money — which is a lesson they’ll be glad they learned if they ever decide to run their own business. Not only can you teach your teen about budgeting in business, but lessons can be learned about starting a venture one can believe in, and never promising something you can’t deliver.
Teach your child to use all of the online tools at their disposal for budgeting. There are plenty of spreadsheets and personal accounting tools available that will allow them to create a monthly budget that factors in all of their income and expenses. And they can even learn how to leave room for saving and unexpected costs!
The Deal on Allowance
If you have a young teenager, consider giving them an allowance each week or month. This practice can teach them the value of saving money and expose them to tried-and-true saving strategies that will serve them well into adulthood. While you will want to monitor how they spend their money, give them a little bit of freedom and see how well they can learn to manage their spending themselves.
Investing can do wonders for improving one’s financial standing. But there are many different types of investments to choose from, and you must learn to weigh risks and rewards and make intelligent decisions if you are going to make investing work in your favor. Now could be the perfect time to teach your child the value of investing money wisely. Introduce them to the various forms of financing, including retirement accounts, health savings accounts, exchange-traded funds, mutual funds, real estate, and more.
Real Estate and Understanding Mortgages
When it comes to real estate, take the time to teach your child about the various terminology related to mortgages, like what foreclosure means, and make sure they know how to distinguish between the different loan types (i.e., conventional, FHA, VA, etc.).. It’s also a good time to teach them what are current mortgage rates. Go online and show them the various loan periods and how that affects rates; for example, a conventional 30-year fixed rate mortgage stands at 5.124 percent, whereas a VA loan for the same period is 4.750 percent.
Interrogating Each Purchase
It’s easy for any of us to think twice before making a big purchase. For example, you will probably not spend $1,500 on a flat-screen TV without first considering other options and comparing prices between retailers. LendKey points out that it’s the little purchases that sneak up and do damage to your budget!
Teach your child to evaluate each purchase, even if it’s a four-dollar coffee or nine-dollar take-out order. Over time, they will get into a rhythm and develop the habit of mindful spending. Then, those little purchases will not accumulate without their knowledge, and they will know exactly where their dollars are going.
Every parent wants their children to have stability when they enter adulthood. Teaching your teen or young adult the basics of financial management can go a long way in helping them lay a solid foundation for succeeding and flourishing long-term. Consider the information and advice above – including how to budget, and having a grasp of investments and mortgages – and keep researching other ways that you can help your child develop healthy budgeting, spending, and investing habits!
NieCat Life Coaching is a faith-based parent and teen coaching resource that is focused on creating a more fulfilling and meaningful life for you and your children. Reach out today for more info! 305-761-5135