A simple idea to is to invite your kids to help you pay your charge card bills. Sit down and review the bills with them. Ask them questions and get them involved. How did they feel when they purchased the item? Do they still have the item? Are they still getting enjoyment from the item? How does it feel to pay for it after the fact? Don't forget to teach them about interest and that your purchases cost 20% more if you don't pay your bill on time. Credit is not always bad and for most people it's a way of life. Another important lesson is to teach your children how to borrow within their means. When your children need something right now and they can't wait, when you feel it's appropriate lend them the money. Keep in mind, the lesson only works if both kids and parents are in on this lesson together. Set up credit terms and have the children adhere to the terms - set up a payment schedule (weekly, monthly, etc.), pay parents back in full according to the payment schedule (plus interest if you'd like), and have the kids make timely payments. Sometimes you will have to tell your kids no. There will be a time they want an item they can not afford, even with credit. These lessons teach kids how to borrow within their means. Do not let your kids have credit cards. It doesn't matter that their friends have credit cards or debit cards. It does not matter that they feel they “need” it to buy things. Just say no. Borrowing from mom and dad allows the parents to be involved with their children's spending habits, allows parents to be a teacher, and it keeps
kids out of financial troubles at a young age.
About the Author:
Let them Learn from You The best lesson of all is by watching mom and dad. Many people are reserved about sharing their financial situation. It's ok to tell your kids that they are not to talk about your financial position with anyone else. It's family business and does not get shared with anyone else. By showing your kids the family budget, how much money comes in, how much is spent on bills, how much goes to savings every month, how much is invested for retirement, etc. is a great way for kids to see a real world example of the importance of savings. Even if your personal finances are not pretty, your kids can learn from your mistakes. Talk to your kids about your financial goals, about your mistakes, about tips you've learned, etc. Maybe together you and your children can learn better ways to manage money. You have the power to teach them how to save and spend wisely. Whether you like it or not, your kids look up to you and learn from you. Don't be afraid to teach your kids about money. Money is important and everyone needs it. Teach your children that money does not buy happiness nor does it define who you are. Money is used to pay bills and can be used for entertainment and hobbies. Learning at a young age how to save and spend wisely will provide your children with some tools to help them have a better financial future.
photo by Iman Woods
Michelle Edwards, CPA is a CFO turned consultant. Her passion is helping small and mid-sized businesses with their day-today accounting, bookkeeping, QuickBooks, virtual CFO, payroll, and human resource headaches. As the owner of Trailhead Accounting Solutions CPA, LLC, an Erie, CO home based business, she enjoys teaching her clients a bit of accounting along the way. When she's not crunching numbers she enjoys hiking, remote camping, quilting, and hanging out with her family here in Vista Ridge. CIRCULAR 230 DISCLOSURE: Any tax information on this site is not intended or written to be used and cannot be used by a taxpayer for the purpose of (i) avoiding tax penalties that may be imposed on the taxpayer or (ii) promoting, marketing, or recommending any transaction or matter to another person. The Certified Public Accountant designation does not constitute any professional engagement between the reader and the writer and is not applied to information contained on this website.
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