We all want the best financial future for our children and when things are so turbulent in the world, it can be difficult to know where to start. Here are some tips to help you to teach your children about money and how to help them get a head-start, even if they are already adults. It is never too late.
How to help your children be money-wise
Set Up Savings Accounts For Them
Start making regular deposits into a savings account for your children as soon as possible. Explain to them that this money will be available to them when they are older. Avoid dipping into savings accounts as many of us have in the last two years. Remember that costs of tuition will come around sooner than you may realize.
And if your children are older and you usually give them cash for birthdays and Christmas, get into the habit of depositing the money into their savings account instead. Cash in hand goes so quickly without even realizing it. By depositing it, you give the money a chance to earn interest too.
Improve Your Retirement Portfolio
Remember that the more you can save now for retirement, the more financial freedom you can offer your children. Look for ways that you can make your money work for you. Consider investing in property if the market works in your favour.
Look at whether investing in stocks could work for you. Talk to a self-directed IRA custodian if you want to learn more about how a self-directed IRA could give you more freedom.
Teach Them About Goals Early
Help your children set up small savings goals. Tell them that their savings can appreciate in value over time. Show them how good saving habits can help them to avoid stress and can give them more options later. Explain more complex elements of savings, such as interest rates, as they get older.
Talk Them Through Big Purchases
Start talking to your older children about bigger financial commitments such as buying a car or renting an apartment. Use your own investments to show them how the process works. Go with them to the bank or to loan providers if they are looking to invest in property or similar large expenses. Talk to them about debt repayments and the potential issues that they could be facing. Show them the latest foreclosure statistics. Explain that a good credit score is crucial for any significant loan. Break down how they can improve their credit score.
Trust Them To Make Smart Choices
Remember that your children need to learn how to manage their own finances at some point. Be available to help but avoid taking too much control. Show them where they can find resources to help them to educate themselves. Give them opportunities to take responsibility where you can.
And financial education doesn’t stop at your children. If you have grandchildren, you can help them learn about money and how to use it too.