Scroll through Facebook and you’ll be stunned at how little today’s youth really know about money. In fact, some teens don’t even know how to pay for gas when using cash.
It’s enough to make any parent worry about the world she is sending her kids into. Thankfully you can prevent your kids from floundering. Let’s take a closer look at money lessons to teach your kids before college.
How to Set Financial Goals
Every child should know how to set a financial goal. It might be buying a bike or even a car. So many parents are guilty of handing everything to their children. This teaches them nothing. Your kids need to know how to set a realistic goal and then work toward it.
How to Save Part of Their Money
Another thing kids need to know is how to save part of their money. Encourage your kids to save part of their money by making it fun. At a young age, setup a savings account for your kids. They will have fun going to the bank with you and depositing part of their allowance or birthday month.
How to Compare Prices
As your children grow, you need to teach them how to compare prices. This teaches them how to get the most for their money. This is something you can start teaching at an early age. Show your children that they can save money on candy by waiting to buy it at the dollar store rather than the convenience store. Always look for ways to show your children how to compare prices.
The Difference Between Good and Bad Debt
You want older children to understand the difference between good and bad debt. Explain to your children that investing in a home or their education is good debt, while charging a new wardrobe is bad debt. Debt should be used to pay for things that will benefit them long term.
Although no matter what kind of debt it may be, you want to teach them to pay off their debt as quickly as possible, and if possible to try to avoid any debt altogether (like education debt).
The Responsibility of Paying Bills
Last, but not least, while your children are in high school, you need to teach them about paying bills. If your children have jobs, they can pay their car payment, car insurance, pay for their lunch at school, gas for their cars, etc.
If your children don’t have jobs yet, give them a weekly allowance that will be used to cover their expenses, including lunch and gas, etc. Explain that they have to make the money stretch the whole week and if they don’t, you’re not going to help. It will teach them to be smarter about how they spend money and the lesson is better learned now rather than later when there are bigger consequences.
If you want your children to have a better chance of doing well on their own, you need to teach them these money lessons. Doing so will help prevent your need to constantly bail them out of financial mishaps.