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Children and financing?

New Contributor

Children and financing?

Hello everyone,

 

Been thinking on this for a while. I have 2 kids in elementary school. Something I have been podering is that fact that many people have poor financial literacy when it comes to finances and credit and credit scores. 

 

So let me ask the parents out there:

 

How do you teach your children about financial responisbility? 

 

I am trying to do the basics like savings and the like, but it is a struggle because young kids are all about those latest toys they want to throw their money at.

 

So what do you suggest for other parents out there pondering how to present this information to the young?


Gardening Since 6/15/17: goal 2020

2016 FICO 642, March 2016 Vantage 602
Current: EX FICO 707, TU FICO 715, EF FICO 697, Vantage 801
7 REPLIES
Frequent Contributor

Re: Children and financing?

My daughter has an accountability binder. It keeps track of her chores and other behaviors. Every week we calculate how many she completed and anything extra she did to help out. We determine if she earned more money for completing the extra chores and achieving certain behaviors. She has a deposit and withdrawal form. It's similiar to a checkbook registry. She writes in when she receives her allowance. She is required to keep her money in the binder. When she wants to use the money for something, she has to keep track of when she makes a withdrawal. When she wants something, she checks to see how many she has and determines how she plans to earn the money to get it. It has really cut down on her constantly asking for a new toy every week. Now I hear, if I do this, can I earn extra money to buy this toy. Or she tells me she is saving up for something.
Ultimately she is responsible for maintaining her binder and keep track of everything. We've used to this system for about 3 years. She is 10 if that helps.

Good luck.
Started in mid 500 3/16
Current 4/10 EQ 618 TU 628 EX 612
Message 2 of 8
New Contributor

Re: Children and financing?

That is a nice idea. It certainly gives her the chance to understand savings and buying power. Any ideas on how to discuss credit?


Gardening Since 6/15/17: goal 2020

2016 FICO 642, March 2016 Vantage 602
Current: EX FICO 707, TU FICO 715, EF FICO 697, Vantage 801
Message 3 of 8
Frequent Contributor

Re: Children and financing?

She knows I have credit cards. She's quick to say "use your card mommy." I have explained to her the purpose of them and how it's not free money. I don't think she understands it yet. For now, I'm just showing her by example until I can discuss it where she can understand it.
Started in mid 500 3/16
Current 4/10 EQ 618 TU 628 EX 612
Message 4 of 8
Valued Contributor

Re: Children and financing?

There are just three basic money principles: 1) spend less than you earn, 2) put aside for retirement from day one, 3) don’t be late, ever. Any talk of specifics on bank accounts, credit cards, mortgage loan, utility bills etc won’t matter much, unless you first fully grasp these three principles.

Because your kids will inherit your financial habits to some extent by way of parenting, it’s important that your actions reflect your words. And as it often goes, money problems are a symptom of underlying issues, which is why basic money principles are really lifestyle principles.

Message 5 of 8
Regular Contributor

Re: Children and financing?

Maybe it's me but you don't have to spend the money you earn immediately. It's okay to get a toy here and there but I do think it's important to save. Personally, I would give my children an allowance each week but teach them to save 50-75% of that money in a 529 or something along those lines BEFORE they receive whatever is left. I would tell them that they are saving that money for the future. They need to understand the power of exponential growth because if they save now, they can watch that money grow immensely by age 18 when they're heading off to college or to start life. 

 

Message 6 of 8
Community Leader
Valued Contributor

Re: Children and financing?

I'm teaching my nephew (and his mom) about credit and retirement (for him). He has agreed to talk to me before he applies for anything and is setting up a 401k already (he's 19). I told him a 1% contribution weekly on a 40 hour week (assuming $10/hr) will be 93k in 45 years, not including interest, raises, and overtime. He was surprised. And he's getting into the idea of credit, turned down the opportunity for a new vehicle to buy an old pick that's in great shape for only 1,500. His sister on the other hand is not going to be very receptive to the suggestions
Message 7 of 8
Valued Contributor

Re: Children and financing?

In the mid 1980s we got our first computer. My dad would input data into lotus 1-2-3 and go over money with my mom when shopping for new cars. Running simple amortizations. It was amazing/depressing to see if they had put 30 bux extra on the mortgage it would have trimmed years and years off. In today's terms, 75 bucks to 100 a month, same thing. So doable, no one does it.
Open one, close three. Open one, close three.
Message 8 of 8