The Oregon House recently passed a bill requiring high school students to earn credits in financial education to graduate. Teaching kids about money is an essential life skill that lays the foundation for their financial well-being in the future. While this requirement is good news, as parents, one of the most valuable gifts you can give your children is the knowledge and tools to save money wisely and build a strong credit history starting now. Good credit can help them save money on loans and premiums in the future. Here are some strategies parents can employ now to help their kids save money and establish good credit practices, including hiring them in the family business, starting long-term savings, and promoting responsible credit card usage.
Incorporate Them into the Family Business:
If you’re a business owner, consider hiring your child within the family business. This provides them with hands-on experience, introduces them to the world of work, and fosters a sense of responsibility. By earning their own money, kids learn the value of hard work and the importance of saving for future goals.
Introduce Responsible Credit Card Usage:
Credit cards are powerful financial tools that can be both beneficial and detrimental. By adding your child as an authorized user on your credit card, you can help them build credit from an early age. Be sure to emphasize the importance of responsible credit card usage, such as paying the balance in full each month and staying within a reasonable credit limit. This strategy allows them to establish a positive credit history, which will be invaluable when they’re ready to make significant financial decisions like applying for a car loan or a mortgage.
Teach the Importance of Budgeting:
One of the fundamental aspects of financial literacy is budgeting. Teach your kids how to create a budget that outlines their income, expenses, and savings goals. This practical skill helps them manage their finances effectively, avoid overspending, and prioritize saving for both short-term and long-term objectives.
Encourage Saving with Matching Contributions:
To encourage saving, consider offering matching contributions for every dollar your child puts into their savings account. This strategy can also inspire kids to save more diligently and witness the rewards of their efforts.
Emphasize the Importance of Delayed Gratification:
In today’s fast-paced world, instant gratification is commonplace. Teaching kids the value of delayed gratification – waiting to purchase something until they can afford it without going into debt – is a vital lesson. This mindset helps them avoid unnecessary debt and builds a foundation for responsible financial decision-making.
As parents, you play a pivotal role in shaping your child’s financial future. By employing strategies such as these, you can empower your kids to save money wisely, build a strong credit history, and make informed financial choices.
To download free youth financial educational materials for the home or classroom, visit https://www.countryfinancial.com/en/planning/resources/youth-education-materials.html#money
Holly Kilgore is an insurance agent with Country Financial ® in West Linn, Oregon, and mom of four kids. She can be reached at [email protected].
“COUNTRY Financial®” is the marketing name for the COUNTRY Financial family of affiliated companies (collectively, “COUNTRY”), which include COUNTRY Life Insurance Company®, COUNTRY Mutual Insurance Company®, and their respective subsidiaries, located in Bloomington, Illinois.
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I agree that financial literacy is very important for individuals to learn at a younger age. The concept of saving, having an emergency fund, living within one’s means is essential for long term financial success. I disagree with the importance of credit card usage. It is such a slippery slope that a freshman in college or a senior in high school does not need nor should they have access to a credit card. High interest debt can quickly put a young person on a dangerous path to financial disaster. Also, it’s unfortunate we live in a society that promotes going into debt and spending money we don’t have. Our government is a prime example as to why it’s a slipper slope. Are we seeing that debt amount reduce year over year? A high credit score is not required to purchase a home. The rest of your points are spot on but not about credit cards.