Teaching Children To Be Careful With Credit Cards

When children start to drive or go off to college, a credit card often seems like a logical addition to their repertoire. Credit cards are useful things to have for emergencies, after all – in the event that the car breaks down by the side of the road and the side of the road happens to be in the middle of nowhere, a cell phone and a credit card can get your child out of the worst of situations quite easily.

However, when students open up their first cards, generally their minds are focused on one syllable, and one syllable only: spend. The problem with credit cards is that due to the fact that there is not visual passage of money from the customer to the institution, many students forget that plastic is actually money. It’s not uncommon for some college students to end up cutting back on classes in order to fit in a job to cover credit card payments. A large number of students get into serious trouble with credit cards, mostly due to a lack of forethought regarding the subject.

This can all be avoided by taking the time to teach your children about credit cards and the proper use of plastic earlier in life. Yes, it might seem like overkill to try and introduce a five year old to the idea of APR and interest, but there are ways that you can start instructing your children in the use of credit cards years before they come into play.

A great way to do this is to involve your children when using credit cards at a restaurant. Explain to your children what it means to use a credit card, and where the money comes from when the plastic gets swiped. Many children might have a hard time with the concept, so it’s likely something that you’ll have to explain many times before your kids get it in its entirety. But that’s okay – even if little Jimmy doesn’t understand the ins and outs of interest after the first day seeing an American Express card, it doesn’t mean that he won’t eventually understand through repetition.

Restaurants are especially great places to bring up credit card usage because of the tip calculation. Let your children in on the calculation of the tip – tell them the difference between giving a waiter ten percent or twenty, and then invite them to help calculate it with you. You’d be surprised how much of an incentive getting to write on the receipt can be – most kids go crazy for the chance to “be like Mom and Dad” and write in the tip amount on the slip of paper.

So, the next time you’re at the restaurant, bring up the credit card to your kids. This can save you a lot of problems once they go off to college and have plastic of their own!

Using Shopping To Teach Your Kids About Savings

It’s true that children live in a world of fantasy most of the time. In general this should be encouraged- having an active imagination is a sign of a healthy, happy, productive child. The issue can be, though, being unable to distinguish reality from fantasy when it comes to television commercials.

Children are generally more astute than what adults give them credit for, but the truth of the matter is that it can be difficult for them to tell the difference between real and make believe when it comes to the world of advertisements. Advertisements, after all, are often designed to make the product look more remarkable or appealing as compared to what it actually is – and advertising toward kids is especially effective in this regard.

It’s important to teach children the difference between what a product advertised can actually do versus how campaigns make it seem on television. You don’t have to do this by outwardly crushing the hopes, dreams, and imagination of a child, but rather through comparing what the product can actually do compared with how it appears on the screen.

One of the most important lessons that can be learned from budgeting and spending money is that if something sounds too good to be true, it usually is. It’s important for children to realize this in terms of their money – when they can see past the varnish that most advertising campaigns put on their products, they’ll be able to more accurately judge which products are worth their money.

Consider sitting down with your children before they go out to make major purchases with their money and discussing the purchase. Why do they want the item in question? How much does it cost, and are they buying it from the cheapest retailer? If they aren’t, what are the reasons that they’re spending more money when it could be potentially bought cheaper elsewhere? Does the item in question go on sale during a particular time of year, and would it be better to wait until later to make this particular purchase?

This seems like a lot of questions to ask a young one, but these are important issues to install into your children when they are small if you want them to grow up to be money-conscious. Of course, you don’t need to hover over every single candy bar that they purchase, just be there as a reliable counsel for when they spend money on larger items.

Parental involvement in their children’s spending habits is important in facilitating healthy understanding of how money works and how it should be handled. Be sure to include your children in your own monetary decisions – clue them in to what is happening and you’ll be planting the seeds for a healthy financial future.

Teach Your Children How To Save From Grocery Shopping

When you think about where you spend most of your money as an adult, the answers are likely simple: housing and food. Think about all the time that you or your spouse spend going to the grocery store, making sure that the pantries are stocked to your liking. If you’re cost-conscious and want your children to be also, why not smarten up on your grocery spending habits and take your children along with you? You might end up saving even more money than you already do on groceries, and your children will learn valuable lessons at the same time.

A family of four that uses coupons can save more than 1,800 dollars a year. Going to the grocery store and involving your kids in the selection of coupons can be a great way to get them used to the idea of savings. Having them search for the item shown in the coupon is a lot like a scavenger hunt and many children, particularly the younger set, respond well to making coupon-searching like a game.

Another way to impress upon children the desirability of savings to explain that if you save more money on groceries, you might be able to give them a little more allowance at the end of each week. This perk shows children that saving the family money will make sure that they end up with more money for themselves, as well. This is a great way to get your children sharp-eyed for bargains at the grocery store!

You can explain to your children the importance of meal planning, and why some things are more expensive than others. Show your children the difference sizes of bottles and why buying the bigger “more expensive” items can end up saving money in the long run due to the fact that you end up with more product for unit price. You may think that these concepts might go over your child’s head, but kids are quick and can generally grasp these concepts faster than you might originally think that they can.

Mostly, impress upon your children the importance of a grocery list and of sticking to it. “Impulse buys” are a great way to drain your financial resources quickly – in order to impress this upon your children, tell them that the next time they go to the grocery store, you’re willing to spend three dollars so that they can buy a single item, like candy or a toy. Have them add it to the grocery list. This teaches them the value of planning ahead – and also protects the parent against the child wanting twenty-nine things at the grocery store!

Introducing Your Child To Saving

Many parents wait until a child is in their mid to late teens to stat teaching them about financial institutions and saving money. We believe that this is a huge mistake – kids are so much more impressionable when they are younger, and introducing them to savings and banks or credit unions at a young age will make them more confident when they start to draw in a serious income when they get older and land part-time jobs; the skills they can learn from their parents at a young age where money-handling is concerned can serve them for a lifetime.

With this in mind, we encourage parents who have children that they would like to educate regarding the importance of saving money to keep in mind the following tips. These are great ways to introduce your child to the sense behind savings in a way where they can understand themselves in a protective trial-and-error environment. Soon, your kid will be saving like a pro!

Give your child an allowance in denominations that encourage savings. If you give your child ten dollars a week in allowance, try giving it to them in ten single bills, or five singles and one five. If you give them a single ten-dollar bill, they’re more likely to go out and spend some money to break it. Smaller bills encourage them to save more money.

Consider opening a checking or a savings account for your child at the bank. Not only will they like having an ATM card just like Mom and Dad, they’ll be able to see firsthand what having a bank account is like. Most bank accounts offer “piggyback” accounts off of a main account, and these are intended for children and preteens. They allow you to monitor how much and where your child is spending his or her money. Remember to allow the child to spend money whenever he or she wants to make a purchase (within reason, of course), as this is where they will learn about how debit cards work. If you forbid your child to touch the money once it’s in the bank account this sets up an unrealistic picture of what a bank account is and will discourage your child from ever putting money into the account.

Help your child differentiate between wants, needs, and wishes. Food, water, and house are needs; video games, toys, and candy are wants; trips to Disney World and a rocket ship to the moon are wishes. While it’s true that children often have a difficult time telling the difference between reality and fiction, working with them on this account can help them begin to understand the difference – at least with regards to spending money.