Kids & Finances – Creditaid

July 20, 2016

Financial Literacy; It’s Never Too Early To Learn

With increasing debt loads affecting youth, and unemployment rates double the national average, understanding how money and credit ratings work is paramount and a part of their educational needs.

Starting with their allowance, children can learn about how to manage their finances. The key is thinking about how much money you have and where you want to spend it. Children and adults alike are often driven by impulse and don’t think before acting. An environment where youth are responsible for identifying only their wants and not their essential needs is a dangerous precedent that can affect them throughout their lives. It’s simply too easy to spend freely and then find out you don’t have enough left, forcing you into debt.

Continue reading “Financial Literacy; It’s Never Too Early To Learn”

March 13, 2015

Creditaid Discusses Money 101 in March’s Smart Biz

The Smart Biz March 2015 edition is out, and in it, Brian Denysuik talks about the importance of teaching our children the basics of money.

How often is actual money, as in cash, used in your daily life? This is what children see every day; the concept of money has been reduced to plastic cards that seemingly act as a “get out of the store free” pass in the eyes of a child who may have never seen anything beyond Monopoly money.

To read more about how to open the discussion with your children and starting their financial education sooner rather than later, check out the full article on page 13 of the March Smart Biz.

If you need to expand upon your own financial knowledge, or just need somebody to talk to about your finances and debt load, contact the caring folks at Creditaid for your free, no obligation assessment.

July 15, 2013

Explaining Savings Versus Spending To Your Kids

Teaching your kids good money habits is not easy. It is not a one-time tutorial, but instead an ongoing process of setting good examples, explaining money concepts and letting them learn by trial and error. However, it is an important lesson that is best learned from their parents. Teaching them the value of saving versus spending is the first step.

Learning The Value Of Saving
As frustrating as it may be to a young child not to get what they want, when they want it, it can also be rewarding. Most children learn the basics of saving through getting an allowance or payment for chores around the house and using that money to buy the things they want. However, many parents easily give in to children who beg and plead for a new toy or treat instead of teaching them the valuable lesson of how to save.

Beyond teaching children how money works, which is done to some extent in school, the more important value that parents can impart to their children is the satisfaction that comes from earning rewards. If a child wants a particular toy, explain the cost and what they will need to do to earn that money and how long it will take. Do not give in to children who already understand the concept of credit and asks to have the treat or toy now and promises to do chores later to earn it. This is exactly what you do not want to teach them! Instead, allow them the satisfaction of working hard to save the money they need to purchase the reward. They will appreciate what they buy even more, and learn a valuable lesson.

Financial lessons are better learned earlier than later, when credit scores can haunt them for years to come. Give your children the tools to learn the value of saving versus spending from the very beginning, to prepare them to be independent and financially responsible.

January 19, 2012

Money-Smart Kids

Where are the Money-Smart Kids?

If basic, yet essential, information on budgeting, borrowing, saving and investing isn’t learned early in life, most young people will have a huge deficit in this very important life skill when they leave home to live on their own.

Kids need to know the meaning of credit and debt before they get out into the “real” world and begin signing contracts on cellphones and credit cards without knowing the trouble they could be getting into. Too often they find themselves with an overdue bill and no money to cover it.

Parents and schools need to band together to teach our young people the basics (at least) of money management. According to comedian James Cunningham, who has set up a national financial literacy program that is sponsored by the IEF and the Investment Industry Regulatory Organization, young people need to know how to save, invest and spend their money.

Cunningham uses humor in his program “Funny Money” to give young people the following three tips regarding money management:

1) Know how much money you have and the sources of your income and write it down. Keeping track of your money allows you to see how much money you make, what you can afford and how long it will take you to pay back a loan based on this income.
2) Take control of your money; don’t let your money control you! This means that before you get a credit card and charge a bunch of purchases, make sure you have some income so you can pay that bill off in full every month.
3) Save some money with every paycheck. You will be surprised at how quickly your money grows and you will love the feeling of taking the money you have saved and buying something outright, rather than making payments on it for the next several months.

January 10, 2012

Tips to Help Kids Understand Debt

In order for children to fully understand finances and how money “works,” they have to learn about debt. The age of your child will determine how you define debt so they can understand.

Make sure you use terms and examples that they are already familiar with.

You can begin with the concept of borrowing something such as a toy from a friend. Explain the need to return the toy to its owner. And if the toy can’t be returned in its original condition then it needs to be replaced by a similar item of equal value. Your child should be able to understand that until that item is replaced, paid for, he is in debt to the person who owned the item.

For the “tween” set you can use real money items and examples. Set up a scenario where your child wants something, a new bicycle, for instance. Write down and discuss the amount of money the bike costs, the amount of money your child has, the amount of money he earns through allowance, or anticipates receiving for a gift, etc.

Talk about whether or not he can “afford” the bike right now, and if he can pay it off within a reasonable amount of time. This discussion will include installment payments where instead of paying back the “loan” with all of their allowance each week, they pay smaller amounts so as to keep some money for their usual “living expenses.” It’s important to work financial terms into the conversation as soon as you child is able to understand them.

Then, actually carry out a transaction. Keep it written down; sign a contract, have them make payments and even set up an amortization schedule so they can see how interest works. Going through this process will give your child an excellent opportunity to learn about personal finances.