With kids out of school and the dog days of summer upon us, parents need to look at this as an opportunity to spend time with their children teaching them to have an understanding of money. Unfortunately, the schools don’t cover personal finance and thus, it’s up to you, the parents, to make sure your children have that understanding and appreciation. After all, if they don’t have an understanding of personal finance, there is no doubt it will cause problems in the future. After all, the consequences of making poor financial decisions are much greater than ever and the sooner you can teach your children, the better it is for them.
One of the questions I’m always asked is when someone should start teaching their kids about personal finance. As far as I‘m concerned, it’s never too early to teach someone. Even a five or six-year old can learn certain things such as counting coins and denominations of bills. Is it ever too late to teach your children about money? The answer is no. Even if your child is an adult and has just started their way in life, there is so much you can teach them before they make a life-altering mistake.
Particularly, for parents of children who are about to go to college in the fall, it is extremely important to have conversations about money. After all, when your child goes to college technically they are an adult and thus, if they make a financial mistake the cost can be severe. After all, in today’s world many employers are reviewing job applicants’ credit scores and using that as part of their criteria in deciding whether to hire that person or not. Thus, mistakes that a college student makes can hinder their career.
When it comes to college students, as part of your conversation regarding personal finance you must talk to them about charge cards. Charge card companies use all sorts of marketing techniques to get students to sign up for charge cards. Whether it’s free concert tickets or free t-shirts, there are gimmicks galore to get college students to sign up for a charge card. Of course, charge cards are an important financial tool and probably more likely than not your college student will need one at school. However, the charge card that would best suit their situation is rarely the one that comes with free t-shirts or concert tickets. It’s not surprising that many of those charge cards come with high fees and also high interest rates.
I recognize it is difficult to have that conversation no matter what the age of the child is regarding money. For some reason, it seems all too often money is a taboo topic that people shouldn’t talk about. Of course, that never made sense to me considering we are the greatest capitalist society in the history of the world.
If you assume your child is going to learn financial skills from school you would be wrong. They don’t teach it and even the ones that do certainly don’t stress it. You need to stress to your child the importance of taking care and properly managing one’s financial affairs. Remember, if you don’t teach your child about finances, who will? They won’t learn it from anyone other than trial and error and unfortunately, if they make a mistake it may be very difficult to correct. Therefore, as we are in the dog days of summer, why not set a time on a regular basis to teach your child about the importance of personal finance. The time you spend today with your child will be invaluable to them in the future.
Rick is a fee-only financial advisor. His website is www.bloomassetmanagement.com. If you would like Rick to respond to your questions, please email Rick at -.