Many Americans are concerned about their financial well-being after retirement. “People who are anxious almost universally say they didn’t start thinking about proper money management when they were young,” according to this article by Chuck Jaffe of MarketWatch. But sharing good money habits with your kids now can help them become responsible for their finances throughout their lives. Here are a few excellent tips.
Kids know all about spending money. Spending comes naturally to them. It’s everything else about money that they need to be taught.
Kids need to have discussions about saving and spending with parents, grandparents, and other trusted adults because they’re not going to hear it in the classroom. Here’s what they need to know to become responsible consumers, employees, and savers:
Money gives you choices. Kids need to know that today’s purchases impact the ability to buy something else that in fact might be more important or valuable.
You can pay for a lot of things you can’t afford. Understanding how debt works — and learning the real cost involved in paying for today’s purchases over time — goes a long way to making someone a smart consumer. The question young consumers must ask isn’t whether they can afford it, but whether they can afford to pay it off over time.
Saving is a chore, but it doesn’t have to be painful. Social Security is an automatic savings program; set aside the politics of the program and it boils down to money being pulled from the paycheck, set aside, and becoming an asset in retirement. Adding a few dollars now to a retirement savings plan, a health-savings account, or for other employee benefits, generates real dollars over time — the payoff for setting money aside now.
