It’s unbelievable how many students graduate from high school or college with absolutely no idea how to manage their personal finances. These days so many young people are dealing with tens of thousands of dollars in student debt, you would think that a class on personal finance would be mandatory. Don’t let your children learn financial lessons the hard way. Here are the 5 financial lessons you need to teach your children before they move out.
How to Manage Her Credit
Most parents have no idea how to talk to their children about credit cards. Instead of teaching our kids about how to properly manage their credit, we scare them into thinking that credit cards are the enemy. Many parents got into trouble with credit cards early on, and now they want to protect their children from the same fate. Telling your child to stay away from credit cards is not the answer! Sit down with her and help her to examine the pros and cons of credit cards. If you teach her one lesson to remember about credit, teach her that the most important thing she can do is pay off her bill each and every month. This will save her thousands of dollars down the road.
What to Look for in a Lease
Before your child moves into her first apartment, it is vital that she understands exactly what she is signing up for. There are several things she needs to be sure to look for in her lease before signing on. These items include the names and addresses of everyone involved, the monthly rent and lease terms, the details of the security deposit, what her rent actually covers, the maintenance agreement and any personal touches such as the policy on pets, painting or hanging pictures. Make sure she knows never to sign anything that she doesn’t understand, that seems incomplete or is missing details of any previous oral agreements.
How to Create a Budget
When your child gets her first full time job the salary, no matter how modest, may make her feel as if she has won the lottery. Sadly, after paying for rent, utilities, student loans, transportation, groceries and other necessities of apartment life, there likely won’t be much money left over for fun. Explain to her the importance of sitting down at the beginning of the month, or at least every few months, and calculating how much money will be coming in, how much money will be going out, and how much she has to spend on fun, clothes and going out with friends. This meeting will help keep her from overspending and calling you for financial help.
How to Split Costs with Her Roommates
It is not just important to teach your child how to create a personal budget, but also how to create a budget with her roommates. Explain that while they should have a schedule for who buys items like toilet paper and paper towels, monthly bills should always be split 50/50. This will keep your child from being taken advantage of by roommates that may not be as financially savvy.
How to Save at the Supermarket
While you may be saying to yourself “Of course my child understands how to save money at the supermarket!” if she has never actually been grocery shopping on her own, she may have no idea. Teach her about the value of clipping coupons, using reward cards and buying generic foods instead of name brands. A quick lesson at the grocery store can go a long way towards helping her stay on budget and to stay in control of her personal finances.
Author Bio: Kenny Soto writer for the blog at MyMove.com. Visit My Move for parenting tips, checklists and hand-picked deals to make your child’s move more rewarding and easier on their wallet.
These are all very important! Make sure you earn more than you spend.
on June 6, 2012 at 12:14 pm
Anna recently posted..Getting Back in the Saddle
When I graduated fom hs 13 years ago, my mom and I didn’t realize the long term repercussions of all my loans and I was stubborn to do what I wanted to do. Goals changed, I still have the loans, and now I’m pursuing social studies teaching jobs. A fundamental piece if my curriculum will be personal finance education but I need the job to teach it.
Rachel recently posted..Believing, Having Faith, and Seeing Signs
on June 6, 2012 at 12:13 pm
Good for you! I think personal finance needs to be taught early on!
Anna recently posted..Getting Back in the Saddle
I think the most important thing parents should teach their children is how to create a realistic budget and stick to it. If you live by a budget, you’ll be able to avoid situations when you run out of money before the next paycheck comes in.
I definitely agree with you, budgeting in fact plays an important role in keeping us in the right track of our spending and avoid unnecessary spending.
Felicia Gopaul recently posted..022 Career100- Becoming a Chiropractor- An Interview with Dr. Thomas Lamar
I teach my children to set aside the savings for the month before spending. After receiving the paycheck, deduct all the payables and the budgeted items, then the rest goes to the savings account. This way, they are forced to stay on budget, and are prohibited to spend all the money recklessly.
Amy Turner recently posted..Survey: Many Americans Believe Common Credit Card Myths
on July 25, 2013 at 4:27 am
Wow! Their child will surely love this one. For me, if my parents did this I will be grateful. Hence, it’s an advantage for one to know of how to live smartly.
Robin Nelson recently posted..How to Collect Data for Dissertation
on April 15, 2014 at 11:42 pm
These tips a great! We are currently teaching our kids about these according to their age.
I really agree with teaching them managing credit. My parents were not responsible with credit cards and it ended up leading to my wife and I having $20,000 in credit card debt, but once I started learning about finances, we paid every bit of it off.
I am almost certain that won’t happen to my kids!
Kalen Bruce recently posted..It is Dumb to Pay Your Mortgage Off Early?
Teaching our kids to not only set a budget, but a realistic one will really help them as they with their own lives in the future. And having them start early would actually make this a better lesson. As they go on with their lives soon, they will appreciate these things more and more.
Budgeting is quite hard for young adults.helping them come up with a realistic budget is important because it assists them to work out their resources wisely. Budgeting also assists them to invest in important things are good for them.Teaching young adults about budgeting assists them to set their priorities right.thanks for sharing this post and your thoughts.
on August 20, 2016 at 9:13 am
You clearly pointed out the golden ones. I’m thinking what else to add but you seem to have it all covered. Oh by the way! regarding leases some landlords ask for multiple advance security deposits depending on the arrangement, better explain that these deposits can be consumable on the last months your kids want to stay if every they plan to move out. If not used it should be refunded back to you.
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on August 28, 2016 at 7:35 am
Good topic! Our daughter just went back to college this month, moving off campus for the first time and now “adulting” (her phrase). I think that’s a great next-step to perform before kids leave college to be out on their own paying bills and such. We covered some of these exact topics with her this summer. For the budgeting, together we went over getting her set up with YNAB (You Need a Budget) – which actually provides its service for free (!) to college students. Thats a huge help to people, especially young people, working on their budgets.
Brad, Maximize Your Money recently posted..5 tips to help plan and pay for your child’s college education
I’ll have to look up YNAB! Thanks for the tip!
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