Big money lessons to teach kids during a pandemic
(NC) As a parent, one of the most important things you can do for your child during these economically strained times is to help them develop their own positive financial habits. Taking the time to teach them now can help them succeed later in life.
“Basic budgeting skills, including the importance of saving and setting aside an emergency fund, are critical skills for all young people to learn at an early age,” recommends Melonie Dixon, vice president of deposits at Oaken Financial. “Fortunately, you don’t need a degree in business finance to teach your kids the basics so they have a solid foundation to better manage their affairs as adults.”
Here, are top lessons you can share with your children:
The importance of having a budget. It’s vital for kids to understand how to create a realistic budget that includes setting aside money for their future. You can use the current situation as an example to talk through needs and wants, and how to reduce expenses when things get tough.
The benefits of a good credit score. Most people don’t give much thought to their credit rating, and it seems even fewer truly understand how their actions can affect their score. While your credit score directly impacts your ability to get credit, it also impacts how much it will cost you to borrow. When talking to your kids, it is important to explain how factors like payment history and credit inquiries affect their credit score, and consider giving older kids an opportunity to start building their own credit with a low-limit card.
Strategies to help boost savings. Retirement may seem so far off for your children that there’s little need to start planning. But the longer they wait to start saving, the harder it is to make up lost time. Teach them about the importance of setting aside even a small amount every month, and the impact of compound interest. Consider using this simple example: a person who at the age of 25 starts setting aside $100 dollars a month will have just under $200,000 saved when they turn 65, assuming an average 6 per cent annual return. To achieve this, they will have only contributed $48,000 of that total.
Learn more about GICs and saving accounts at oaken.com.