Less than half of the states in the United States require high school students to take financial literacy courses before graduating. This means that too many young people are going off to college with little idea of how to properly manage their finances. Teaching your kids these five money tips will help them learn how to manage their money for a financially secure life later.
Save for the Future
Putting money away for a rainy day is a key part of smart money management. Have your kids start small by putting a portion of their allowance or money they have earned into a bank. They can watch the money grow until they use it to purchase something that they want. Getting into the habit of saving now will be very helpful when they are managing their own finances in the future.
Don’t Try to Keep Up With Your Friends
A good way to get into financial trouble is to follow the spending patterns of the people around you. Buying something that you don’t need just because your friend bought one is a waste of money. If they are buying $200 shoes and you would be happy with $50 shoes, choose what is right for you and save your money. You never know what another person’s financial situation really is so you should not try to follow them.
Limit the Activities You Pay For
Free activities are available everywhere, so there is no need to always choose something you have to pay for when you leave the house. Many cities offer free activities to their residents, including live music concerts, movie nights, zoo and museum admissions, and educational classes. Check your local newspaper and the schedule of events at your local library to see what free activities are offered.
Limit Your Debt
Utilizing debt to acquire things you desire quickly can be beneficial in some cases. However, it is important to limit your debt to ensure you are not spending a considerable portion of your income to service it. Everything that you buy by taking on debt costs more than you paid for it once interest charges and account fees are factored in. Consider every loan and credit card purchase carefully and ask yourself “Is this item worth going into debt for?”
Limit Your Living Costs
Your living costs are generally the largest drain on your finances. A bigger living space requires more energy, requires more cleaning, and requires more maintenance. Choosing a smaller space helps you save money, time, and energy. You should also consider living with a roommate that will split the living costs with you.