As a mom, you have an obligation to teach your kids about financial responsibility. You need to share everything you know about paying off debt, what pitfalls to avoid, and where to invest. And the right age to do so would be while your kids are still young. When they could grasp everything and are still very impressionable.
There’s no shortage of financial lessons to share. Here are just a few.
Having a rainy day fund
You’ll never know when you’ll run into an emergency. Your child should be ready for anything. Setting aside money for emergencies is a great practice. The thought of having no safety net should scare them to no end.
Just recently, a Reddit user suffered a herniated disk in his neck. He missed work for six months and was only paid half of what he normally gets. So what saved him? Yes, his rainy day fund of $15,000.
Getting out of debt
In an ideal world, people would never take out loans and get themselves into debt. But life isn’t perfect and we eventually take out loans to get through life. The important thing to teach your kids is to get low-interest loans. They should never take the first offer they get.
Finding the right student loan, for starters, is an amazing first step towards financial freedom. You wouldn’t want your kid to be stuck with a high-interest loan. That would cripple your kid in the long run.
Let your kids know that they shouldn’t be relying on credit cards. With credit card rates soaring upwards, kids need to stop using credit cards to make purchases. Let them know how interest rates work and how it could affect their future.
This CNBC article states that 9 out of 10 Americans failed a six-question quiz about loans. That is alarming. Don’t let your kid grow up not understanding how loans and debt work.
Moms can have a strong influence on their kids. Set a good example by showing your son or daughter how to live a simple life. Teach them skills they could use to save money in the future. People who don’t know how to cook will most likely spend their days eating out as an adult. That can get expensive real fast.
So teach them how to cook while they’re young. Show them how to wash their clothes so they won’t have to spend money on laundry when they grow up. Having these skills gives them the option to forego spending on services they can do themselves.
Setting financial limits
Your child should be setting financial limits. Having a fixed budget will prevent overspending. It will also teach your child how to stretch every dollar. It may also inspire your kid to get a part-time job to make up for the lack of income.
It will also slowly change your kid’s spending habits. Instead of paying for extraneous items, your child will start allocating his or her funds towards something more useful. Having financial limits would inspire your kid to be more creative.