As your kids start getting older they start to become more aware of life and all it’s various aspects. They start to wonder about things and their friends start hinting and giggling behind their backs because they are aware of things that maybe your kids aren’t. Is it fair on your kids? Shouldn’t you tell them some of the secrets about life? I’m talking, of course, about money, interest and debt.

Our kids are bombarded by advertising. Most kids watch tv for at least a couple of hours a day and in that time they will be encouraged to want things, all sorts of things. Toys, sweets/candy, the foods they should be pushing you to buy for them, the burgers, clothes, computer games and cars.

Cars? What 5, 10, 15 year old is going to buy a car? Well they probably will do one day so why not start them young? If I were an advertiser I would love to pre-prepare a purchaser like that. If you grow up thinking that a Ford is a cool car then don’t you think you will always thing Ford’s are cool? I’ve always loved the Jaguar E-type. I have never even sat in one but they came out when I was a kid and I have loved them ever since. I still have a soft spot for Jaguars and that may be why. I was pre-sold on them as a child.

So, your kids are constantly being encouraged to want. Not need, not require but need. So how do they imagine they will pay for these things? Why ask Mother or Father of course. Isn’t that where money comes from? Well actually, no it doesn’t but why would they think otherwise? That’s all they know.

They get virtually no education about money in the big wide world while they are at school. They learn a little about percentages and may find out about compound interest but do they relate that to the real world of managing a household budget? No.

They grow up thinking that money comes from nice people who very kindly just give it to them when they need it. They get older and maybe go to college or university and suddenly they have to face up to making financial decisions. Big financial decisions. The have to decide on student loans, bank accounts and special credit cards.

Without some fundamental understanding of how these things work what chance do they have? If they don’t really understand the concept of credit card debt, compounding interest and their experiences up till this point have been nice people (you) giving them money don’t you think they might find this all a little mind boggling?

They will meet and make friends and discus the options as to which bank account, loan & credit card might be best but it’s a case of the blind leading the blind and you don’t really want your kids going out into the big world of work with more debt hanging over them than they need to have? Do you?

Start teaching your kids about money from an early age.

Don’t let them think that money grows on trees.

Make sure they understand that you have to earn money, one way or another.

Explain to them the true cost of buying things on credit cards.

Show them the difference between reasonable interest rate loans and really high rate loans.

Teach them something about credit scoring and how being sensible with debt makes life easier.

Teach them that it pays to be punctual in paying your debt. Late gets a higher rate & charges.

Explain that using cash is cheaper in the long term.

Show them that being happy in yourself & proud to be you, saves a lot of money compared to trying to impress the friends & neighbours.

Teach your kids about money and show them that you care.

 

Money Magic: Seven Simple Steps to True Financial Freedom (Quick Reads)

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  3. Student Debt – Should You Pay Student Loans Off Early?

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