In a world where our children have a capacity to learn that is substantially greater than we had or that our parents had and that these same children have learning tools such as the internet, we must all ask ourselves have they access to the tools necessary to manage all its information. During our apprenticeship, credit management was something that did not exist and therefore our education in this area was limited.
Over the years and following personal experiences, we have learned to manage our finances and our credit.
It is certain that financial products such as a retirement fund and a savings fund for the education of our children are products which have been in existence for a relatively short time and we have therefore been obliged to ourselves self educate.
However, what is happening to our children and what can we do to ensure that they have the best tools to properly manage the credit products we know today and the products that will develop in the next few years when our children will be adults.
Talk about it: our children must understand that life has a cost and that this cost is paid by the income that parents are able to generate. It is important that our children realize that everything has its cost and that each of us has to make choices.
The discussions we can have with our children about credit and money in general must take into account their age and level of understanding.
Managing your money and making the right choices
An allowance given to a child is a great way to start educating our children in terms of managing their money. At the very base, the child must at least know how to count.
Money management can be the child’s start to learning how to manage decisions. The ability to make (good) decisions is an important tool for their future.
Error is allowed
Since error is human, as the saying goes, it is important to let our children make mistakes in learning how to manage their money. The error must be managed properly by helping the child to realize why he made a wrong decision and that it would have been the right decision. In these circumstances where the sums of money are minimal the consequences are small but the lesson is important. The allowance for young children
For very young children (Elementary and secondary school), an allowance of a few dollars is a satisfactory allowance, all depending on the conditions attached to this allowance. Does the child have to make his bed, the dishes or perhaps it is simply a sum of money which he must use for these small personal expenses which will not be paid by the parents. Parents must establish clear rules for their children that will suit the family budget and which will in fact be an integral part of the family budget. A child cannot be penalized (and will not learn) if the rules of the game are not communicated to him from the start.
The amount of the allowance is not the most important point but rather the management of the amount.
Parents must explain that in all situations there must be a portion of the amount remitted that is allocated to savings. Some important points to cover are:
- Opening a bank account;
- Rules of the game (who pays what);
- What to do with gifts of money;
- What are the rules regarding the amounts accumulated in the bank account.
The credit card for our older children
Should we let our almost adult children get a credit card?
A difficult question to answer, but it is certain that our children will have access to credit in their life and that possibly it is important for us to be familiar with this product so that it can better manage it during their adult life. Our children sadly acquire financial responsibility at a very young age (very often before he is an adult), whether it is time management for the cell phone or management of the money he earns from working time partial or summer work.
Financial responsibility means that our children are able to manage their emotions regarding purchases, relationships and all that can lead to in the consumer environment in which we live. Allowing our teenage or young adult to have a credit card should only be done if we are of the opinion that our child is able to manage his budget.
Must not learn to manage his budget after having the credit card.
In order to give our children the greatest financial chance of survival we need to tell them about real life with its ups and downs. We can tell them about our mistakes and our financial successes. We are their model. We must also actively involve them in our financial life regarding the choice we have to make in relation to our purchases and that we do not buy everything we want. Indeed, we make sacrifices and our decisions related to family expenses are well thought out.
It is also important to ensure that we clarify their goals and that when the goals are reached they receive a reward. A lack of education for our children at this level is likely to be serious in the short, medium and long term. Let us give them the chance to have an overwhelming financial success.