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Ways to Keep Kids Out of Debt
Unless your child/children receive a windfall of cash (inheritances, beneficiary of lottery winnings or any unexpected large sums of cash), it's very likely they'll have to take on some amount of debt as they grow older. The size or amount of that debt can be somewhat avoidable if parents take practical measures to curb any insatiable feeling of want, want, want as soon as they notice their children revealing such traits. One sure way a parent can help that their child's financial lifestyle won't become extremely stressful due to indebtedness is money management.
Money management should be implemented as soon as the child has a basic comprehension of reading and math. At that stage, consider opening a checking/savings account with your child and explain why you're doing so. Reveal to the child on a piece of paper what happens when money is saved by using images of products that correspond with each dollar amount saved. By doing so, you'll instill the importance of time and patience that comes with saving money. If you're a parent that gives an allowance to your child, show them how to stretch the dollars throughout the month versus spending it immediately or over the course of a week. It may be a good idea to allow them to spend the money at their own pace first to show them how fast the cash balance diminishes with each purchase.
Ease up on caving in towards the wants requested by the child. We love and adore our children so much and outside those special days each year, we may cave in on majority of the child's request of wants if the money is there to spend. In doing so, we're showing the child that many things in life are attainable without showing them the cost of attaining such items. Unless you have financial plans to support your child throughout their entire life, a conversation about wants and necessities need take place earlier rather than later. We're not saying it's bad to buy your child the world, but as a child ages, so does their mental way of thinking and the last thing you want your child thinking as an young adult is "I can have whatever I want" because they'll find ways to get whatever they want through usage of debt if the cash isn't available.
The earlier the child determines that difference between wants and needs, the better off they'll be once their older and independent. They'll be equipped to make better informed decisions involving purchases and become more serious about the cause and effect of making such purchases. Whenever you tell your child you can't purchase an item right now, consider explaining to them why not and how you will SAVE for such a purchase on their behalf. Children grow to mimic what they see and hear, so periodically show and tell them what you're doing with the household budget (for example, you're paying the electric bill before these other bills to keep the lights on in the home and your paying the gas bill to be able to cook dinner every night and have heat when it gets cold), the more they hear about the usage of money and money management the better they'll be at completing such task on their own as they grow older.
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During the month of September, we had the opportunity to provide our expertise on financial matters involving small business and individuals. Click the images below to read them and be sure to click the Facebook, Twitter and Google Plus button to share with your friends and family. Thanks!
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XNE Financial Advising, LLC is a financial service company that focuses on core financial management of individuals and small businesses. An independent, fee-only firm located in the state of Virginia that provides services to individuals & businesses on financial and business management matters with concentration of clients inside the tri-state area of Metropolitan area of the District of Columbia, (DC, MD, and VA) with minor concentration of other states.
Mr. Epps has a bachelor's degree in Information Systems Management and graduated Cum Laude of his class. Mr. Epps spent nearly eight years with a middle market investment banking firm and within his recent capacity at the firm, Mr. Epps served as a Registered Representative (Broker) where he was responsible for preparing, collecting, maintaining, and disseminating financial analysis for the banking sector. Mr. Epps is a current holder of FINRA Securities Licenses 7 and 63, an IRS Registered Tax Return Preparer (December 2011), Certified Microsoft Office User Specialist, Intuit QuickBooks Certified User (Pro/Premier Versions) and he's company is an Authorized IRS e-file Provider.
Sincerely,
Xavier Epps
XNE Financial Advising, LLC
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