Your Credit Matters (Not Just To You; To Your Kids Too)
As the parent you already know that it is important to be financially responsible and to make sure your kids know how money and credit work. After all, you want to raise your kids to be good with money, right? You don’t want them drowning in debt within months of getting their first credit cards do you? So what do you do?
You can talk to them. You can enroll them in classes. You can buy them books and watch videos with them. The very best thing you can do, though, is lead a financially responsible lifestyle yourself and talk to your kids about the choices you make and why you make them.
Start With the Money You Have on Hand
You’re a savvy Mom who’s always on the lookout for a great deal. You know how to hunt for coupons. You know, and you’ve taught your kids, how to ensure that you’re getting the best bang for your buck when you go shopping.
But what about deciding not to buy? It’s one thing to teach your kids how to find fantastic deals. It’s another to teach them how to leave things in the store. Here are some tips to help you with that:
1. Go green: if it sucks up electricity or space in your home, you probably don’t need to buy it.
2. Only shop for what you actually need. Spending time browsing “for fun” leads to temptation and temptation often leads to spending.
3. Don’t buy something new if you (or someone you know) can fix your current whatever it is for a lower cost or if you know how to make that thing yourself.
Work on Your Credit
Pay your bills on time every month. Pay a little bit more than the minimum amount due. A good rule of thumb is to figure out what you’re going to be charged in interest rates and then tack that on to the requested minimum payment and make that the lowest amount you pay each month. That way you’re actively paying down your bill and “canceling out” (not really but it feels like it) the interest fees. Show your kids what you’re doing. Show them the statements and teach them how to figure out what the monthly interest rate will be. Have them sit with you as you write out the checks or pay each bill online.
Look for better credit deals. Look for low or even no interest credit cards when your balances get low enough to transfer (if you’re confident you can pay them off quickly and before the end of any promotional periods). Have your kids help you search so that they can learn how to tell whether or not a credit card deal is worth the trouble. By having your kids with you during this process, it can help them to become more financially savvy when they grow up. They’ll get to the point where they can answer the hard financial questions on their own, such as when should you save or pay off debt?
Save for a Rainy Day
You know how important it is to save. Everybody does. It’s often harder to actually practice the habit of saving (especially the not touching of the savings account). To make it easier on yourself, set up an automatic transfer at the bank. Have the bank transfer either a certain dollar amount or a certain percentage of every deposit into a savings account. Make sure you get a bank account with a consumer friendly financial institution.
Does your family have a great system for its money? What has worked for you in the past?
*Photo credited to svilen001