We love our children, and of course we want them to have all that they need…and much that they really don’t need. Do you find yourself at the crossroads of another meltdown with your child at the checkout because of something that they have eyed and can’t live without? Of course you have! We all have! But there may be help in teaching them to curb these emotional attachments for things that they won’t remember five minutes after they arrive home.
Get creative and help your children earn money and teach good money management, which in return will help them to make wiser purchases.
Help make earning money fun. The following Here is a list of chores your young child can accomplish with minimal help:
Picking up toys
Feeding the family pet
Collecting household garbage/ recycling to be taken out by adult
Setting the dinner table
Tidying their bedroom
Pitfalls when it comes to chores.
Don’t insist on perfection.
Your child is not in the military. They are children and still learning. Challenge children to excel, but don’t scold.
You may think that your child is too young. They may be more capable than you think.
Don’t be stingy with praise.
Get that praise going right away! Don’t wait until the chore is done. Praise and encourage the child while the chore is in progress. You want to build positive momentum, especially with young kids.
Don’t be inconsistent.
Be regular and don’t allow for putting off for another day.
HAVE A PAY CHART
Have a chart posted where your child can visible see it so that they see how much they earn with each job. Pay weekly and help your child to spend the money on items that they have made a list of. This will assist in keeping them focused instead of spending on impulsive items.
With all the information that children receive at school, t.v., internet, friends, family and reading; getting an education in finances, credit and saving doesn’t seem to be an area that they are learning or applying to their life.
A recent Capital One 360 poll found that 87% of young people between the ages of 12 to 17 reported knowing at least an average amount about managing finances. Or not. According to the study, it also found that 24% of them think a debit card is used to borrow cash.
A Charles Schwab poll found that fewer than a third of teens understand how credit card interest works and four in 10 can’t budget.
Talk to your teen about financial responsibility. Does your money-talk with your teen begin with, “How much do your need?” If so, this may indicate that there is a need for more understanding to becoming financially responsible and independent. The more that you talk to your child or teens about money, the better financially prepared they will be as they go off on their own. It is important to challenge them to be responsible for their own financial actions, while the consequences are not as serious. Learning to appreciate delayed gratification will set the foundation for the rest of their financial life.
EARNING MONEY: EARLY ELEMENTARY CHILDREN To begin teaching financial responsibility, it is recommended that you start at a very early age. That age may vary depending on maturity and understanding. It’s probably safe to assume that at or around the age of 5 would be a smart time to begin rewarding with an allowance. A short list of ideas are listed for giving money for work performed younger children. Do keep in mind that younger children may not do the best job on these tasks, but it’s about responsibility and learning.
Picking up toys
Feeding family pet
Collecting household garbage to be taken out by adult
Setting dinner table
Tidying their bedroom
I do not personally recommend giving an allowance for the following, because these are not chores. These should be expected to be done without question.
Getting up and out for school and church on time
Schoolwork / Homework
Being respectful and minding adults, ie, being good during a photo-shoot should not be rewarded. We need to be mindful about bribing our children for “good behavior”
Not being quarrelsome or talking back to parents
EARNING MONEY: TWEENS & TEENS: According to CNN Money, there are 4.7 million teens with jobs this year -an increase from last year. According to datacenter.kidscount.org there were 73,583,618 teens less than the age of 18. That means there are far more teens not working than working. With that being said, teens and parents need to be creative when finding ways to earn money. I have compiled of possible tasks:
Hosting a garage sale
Yard work for neighbors or family
Housework for elderly or infirm neighbors
Helping neighbors with unloading groceries or clothes from car and putting away
Pet sitting or dog walking
Become a lifeguard
Become the neighborhood’s designated tech support
Organize a fun run
Driveway power washing
Garage cleaning and organizing
Assisting neighbors, church friends with getting seasonal decor from storage and putting back. Maybe even helping to decorate, such as hanging outside lights.
Once your child has money, let’s start with giving back. If you are teaching your children christian principles, teach them to set aside the very first 10% as tithe. This is a great biblical teaching and teaches the promises of God. The next amount set aside is 20% to be deposited into teen’s savings account, by the teen. As a tween or teen, it is not too early to start a savings account at your local bank or credit union. Be sure that the account accrues interest.
The 70% that remains should be spent wisely. Many times your teen may want to purchase a pricey item such as a new cell phone or i-pad. It may be beneficial to help with matching their contribution. This will create better spending habits than using a credit card and having them repay it. Once a teen has learned the art of patience, then introducing a credit card for certain purchases may be safe.
Children need to know how much items cost, from the cost of many grocery items to the clothes they wear. They need to be taught the value in what you own and what they are being blessed with. I can’t help but notice how teens throw away so many items of value. We live in a disposable age where money is even devalued because things are too easy to replace.
A couple of years ago, a high-schooler on the girl’s softball team was not keeping up with her softball glove as they were loading the school bus. Noticing that the glove was a very nice and pricey one, the coach called her to the side and already knowing what her answer would probably be, he asked, “Do you know how much that glove cost?” She replied that she had no idea how much it cost, that her parents had purchased the glove for her. The coach smiled and shook his head. His point was reality. Children usually do not place value on items when they were not taught to value them.
Teach your children to take care of what they have. They may not get another one. This still rings in my ears, for I heard it many times as a young child. Because of this message, I still have several items from my childhood because I took care of them. Many other childhood items I was able to later sell.
I will conclude this blog by saying that this is all about teaching financial responsibility. Not about having such stringent rules that money becomes a headache and source of arguments. I often talk to clients in their 20’s and early 30’s that admit they were never taught about budgeting and how to used credit wisely. It probably has a lot to do with their parent’s not knowing how to teach what they didn’t know.
Do you have credit problems and would like to break the cycle and have a better future for you and your family? Please call us. The credit evaluation is always free. We will need to review all three of your credit reports to give a complete evaluation but we can help you get them for $1.
Remember to lead and challenge your children by example.
Is your teen ready for a credit or debit card? Financial education should begin as a very young age. Don’t wait for your child to go away to college to learn about money management, credit and budgeting. He or she should have a good concept about this before they pack their bags. By all means, don’t arm your children with credit cards and no idea on how to handle it. Understanding how credit works will help them avoid the trap of revolving credit. Credit card companies are in the business of making money and keeping you in debt.
What to teach your teen:
What is a credit score.
How does credit affect me.
How do I keep tabs on my credit.
How do I protect my credit.
How to stay out of debt.
Don’t charge for items that you don’t have the money to pay for.
Don’t buy what you don’t need. Credit means debt. Debt means money that you will have to pay someone until you pay it off.
Help your child learn to save for what they want. This is important to start at a very early age.
Teach and assist your child to set a standard for automatic saving. Like 1/3 allowance and 1/2 of all birthday gifts.
As our children are growing up it is imperative that we teach them to be responsible with their finances. Your teenager is more mobile and you may find that it’s important that they have access to funds in case of emergency or otherwise. There are options and a parent needs to consider if their child is responsible enough to be in control of a credit or debit card. Let’s look over some of the different options to help in making a decision.
1. Prepaid cards are a hybrid breed. Just because it is called a prepaid credit card and works like a credit card does not make it a credit card. These are cards that are reloadable and works like a debit card. You choose the amount that you want to load on the card, use it like a debit card and it deducts the amount from your balance. You can then reload and continue to use. Being that these cards are associated with major credit card networks, American Express, Visa, Mastercard, these prepaid cards can be used anywhere the major credit cards can be used, whether it’s to purchase groceries, shopping at the mall, paying bills, or online shopping. This card is ideal for tweens and teens. No worry for over-drafting checking accounts or being accessed over-the-limit fees with credit cards. Prepaid cards are an alternative to banks. There are millions of people that do not want to use banks or traditional credit. Although these cards are not connected to a checking account, it still allows you to things that require a credit card, such as rent a car or book a hotel room. With many teens with a part-time job, cards even come with a checking and routing number so that a teen could have their check directly deposited onto the card. Many prepaid cards offer features to be able to access funds at an ATM. You also have the option of loading their allowance on the card. Prepaid fees. Be prepared to be charged with fees with a prepaid card. Each prepaid card comes with it’s own fee structure. Be sure and find a card that best fits your needs. You are protected. Prepaid cards offer the same theft and loss protection that major credit cards offer. Which makes this a pretty safe bet.
2. Store card / major credit card. While credit cards have a credit limit and you are able to use the card until the limit is exhausted. Credit card companies may extend additional credit at a cost of an over-the-limit fee. Eve with a credit card, it is important to keep tabs on your spending. With interest rates charges it may become very difficult to get out of debt. No one wants to head off to college in credit card debt and parents should not be left to clean up their teens out of control spending. Choosing between a store card or credit card may be a challenge when trusting your tween or teen to spend sensible and not send you soaring into uneeded debt. If you feel that your teen has not shown financial responsibility with their money and allowance, then you may want to rethink handing them a card to carry on a full-time basis. You may choose to allow them to use the major credit card on a temporary basis and for particular purposes and allowing the to view the invoices and pay the payments. Also educated them to understand the reality of charging and paying with money they earn from their job or allowance. Although there are fees for reloadable prepaid cards, there are over-the-limit fees for many credit cards. Just being charged one $39 over-the-limit fee is a large amount compared to prepaid card fees.
Teens learn from their parents money management. By gradually graduating their freedom to using your credit cards you will be able to build good spending habits and trust.
So while there are differences in choosing a card, education and holding your teen responsible for their spending is the answer.
Surefire ways to create money and credit problems. If you plan to get denied for a loan or mortgage the following plan will work great for you.
1. Go ahead, charge those clothes, shoes and stuff that you can’t afford. After all, you worked hard all week and you deserve it, but you’re a little short on cash. You are short on cash every week but it’s such a good deal, and it’s only a total of $126.52. After all, you can pay that back in 6 months, well unless you use the card again for that unforseen medical bill of $225. There is no savings to fall back on. Now your card is up to $351.52, oh and the two late fees of $35. Guess that’s now $421.52.
Maybe when you get you income tax refund you can pay off the credit card. Maybe? Had you not purchased the clothes and worked out and interest free repayment plan with the medical bill, this debt could have been avoided.
2. Don’t shop around and pay full price whenever possible. Internet price shopping can save lots of $$$, but why bother. You want it now!
3. Transfer balances to 0% rate credit cards, then make the minimum payment.
4. Add balances that exceed apx 19% of your limit to credit cards.
5. Apply frequently for new credit.
6. Deal with finances….hmmmm…tomorrow.
7. Use Payday loans for emergency money. This is a cycle that is most difficult to break.
8. Pay credit cards with home equity. It’s best to work out a repayment plan to pay off credit cards and don’t attach your home’s equity.