(FinancialHealth.com) – For parents and grandparents, the worry is always there, wondering how their children will make it in this high-pressure world. From being self-sustaining and making ends meet to getting a college degree, everyone wants the best life for their child.
The younger generation isn’t saving like they should. Here are some suggestions on getting them started.
Basic Fundamentals
Most schools don’t teach the basics of how to truly save money and why it’s important. So, begin at home. Learning basic saving fundamentals can begin at a young age, especially when children start studying mathematics.
One way to do this is to create basic story problems that promote saving a portion of the money you earn. Duplicate this by starting a savings account for them so they can set aside money for special events or an expensive toy.
Start Them Young
The younger generation may not be saving like past generations because of technology and how quickly things can be bought. For example, kids in the 1980s had to earn cash, get a ride to the store and then wait in line to buy the newest video game console or toy. Nowadays, they can pay for items through their XBOX or with the touch of a smart tablet, often using their parent’s credit cards.
One option to counteract this is to give kids chores to complete and pay them in cash. They can save the cash and deposit it into their savings account to learn the ethic of saving.
Invest In Their Future
In today’s world of instant gratification, it can be hard for kids and adults alike to save money for college and future expenses. Luckily, there are some options to make things a little easier, including:
- 529 qualified tuition plans — Prepaid tuition plans and education savings plans allow parents and grandparents to contribute funds that are tax-free when withdrawn for educational purposes such as tuition payments to a university.
- Life Insurance — Parents and grandparents can open a life insurance policy for their kids and grandkids. This can help ease the financial burden for them later in life and actually works like a savings account too. Some policies allow for early withdrawal for cash access.
- Parent-Child IRA — Parents can start an IRA for their kids at any age. This takes saving a step further. For every dollar that a child deposits into their savings account, the parent matches that deposit. It’s a great way to build up a good nest egg while teaching the fundamentals of saving dollars and cents.
These are just a few savings options that go past simply putting cash in a piggy bank (which is still a good idea, by the way).
Establishing Good Credit Habits Early
Cash is great when it’s readily available and on reserve at all times. Unfortunately for most people, that’s not feasible throughout their entire life. Teaching kids positive credit habits early on is important. This includes:
- Never borrowing more than what they can pay back
- Paying debt back on time
- Avoiding multiple revolving credit accounts
- Using credit cards to build credit not get further into debt
Credit is almost as good as cash, but only when it’s on favorable finance terms and used wisely.
This generation isn’t saving for things like college, their first car or a home as much as kids did in the past. To turn this trend around, the change starts with parents teaching the fundamentals of savings and credit. A little education goes a long way toward their personal success.
~Here’s to Your Financial Health!
