Today’s youth are ill-equipped to deal with a future that offers greater employment challenges (the unemployment rate for workers in their 20s is 15 percent), higher college costs, less access to credit, and the tyranny of credit scores that can hinder their options. According to a recent Wells Fargo survey, only 5 percent of young people between 18 and 22 believe they have the know-how to be on their own financially!
Imagine how different the economic meltdown might have been if every school-aged child were taught some basic economic skills, from learning how to earn, save and budget, to investing and donating money. My Credit My Future believes in empowering individuals with credit and financial education so they are better prepared to make the best financial decisions. We understand schools alone can’t account for the economic education of the next generation. The education must begin at home and the sooner the better.
Below are 10 tips on how parents can help their children become better prepared to make financial decisions
• Set up a budget that includes savings, and investing. Talk about the difference between wants and needs.
•Have them keep track of their spending for a week and suggest new ways they could have used the same money—Offer to match their savings to show them the benefit of drawing interest on savings.
•Urge them to allocate their money into spending, investing, and giving categories whether it is $1.00 or $100.
•Encourage entrepreneurial spirit when wanting to seek additional income. Paper Route, mow lawns, babysit, etc.
•Help them decide what their time is worth when they babysit, house sit, dog walk, mow lawns, and help out a neighbor. Make sure they don’t say, “Well, pay me whatever you want.”
•Show them how to balance a checkbook.
•Compare retail and sale prices. Put any money saved into a savings/investment account.
•Suggest they do their own research before donating to a worthy cause, starting a savings account, buying a large ticket item, such as a computer, or even stocks. Aid them as they become a savvy consumer and donor.
•Explain why they will have to pay taxes.
•Search the Internet for on-line money lessons.