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Be Wise With Money
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Kids & Cash
November 3, 2014 | John Caulfield; excerpted from Thrivent magazine
Seven helpful money management tips for children
The list of things that need to happen before your kid goes to college can be long. Encourage them to get good grades? Check. Visit college campuses? Check. Teach them how to manage money? Oh, they'll learn that on their own.
Wrong. And that lack of financial knowledge is hurting your kids. Here's how to make sure your kids are ready to handle money independently.
Help them realize the value of money
Kids of all ages sometimes think mom and dad have unlimited funds, but you can teach them that isn't the case. Have them help you pay household bills once a month, to see all the things that have to be paid for.
Help them open a checking account & learn how they work
Start by establishing a joint account in your name and theirs. Show them how to check their balance and reconcile their accounts each month.
Show them how to mind their money
"A lot of kids are blowing money and don't know where it's going," says David Stringham, a college planning specialist for Thrivent Financial. To avoid this, kids should track their spending against their allowance or part-time job income.
Show them how to manage credit
Get your child a credit card, with you as the co-signer, as soon as they have a steady earned income (such as getting a part-time job at age 16). Keep the credit limit at $1,000, though, and let them know that it's for emergencies only and that they have to pay off the balance each month. This will help them learn how to use the card before they go off to college.
Caution them about "minimum payments"
To show the impact of only making the minimum payment on a credit card debt, show them your bill. Thanks to recent regulations, credit card companies must now tell you just how much it will cost you in interest – and how long it will take you – to pay a debt using only the minimum payment.
Stress the importance of paying bills on time
Explain how late or missed payments for a cell phone, credit card, utilities and more can seriously hurt a person's credit rating.
Remind them to protect their personal information, in person & online
That means they shouldn't lend a credit or debit card to a friend. Shred credit card offers or old papers with account numbers and other information. They should leave their Social Security card in a safe place – not a wallet that can be stolen. When it comes to online, explain that they shouldn't use their birthdate or Social Security number as a user name or password for accounts. Show them how legitimate some email scams can look. When in doubt, they should keep their financial information – bank accounts, credit cards, Social Security numbers – to themselves.
To learn more ways you can help your teenager make wise money decisions, attend our Parents, Teens and Money Matters® workshop.
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