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How the average person can save money quickly and easily

Teach Your Kid to be Money Smart

km-6My son just celebrated his 18th birthday by throwing a party for his friends. This birthday was special as Luke paid for all the expenses. Nothing can make you feel prouder when you see your kid become so independent. You may think your job as a parent is over, now that your kids can take care of themselves. But the question you need to ask yourself is have you raised your kid to be money smart?

Teenagers often tend to develop care-free spending habits without saving enough of their hard-earned money. Hence, before they get into financial trouble with credit cards or loans, there are steps that can be taken to teach your kids to be money smart.

No preaching, just tips: Don’t go preaching to them about what they should and what they shouldn’t do. Explain how there is a strong possibility that if they don’t act smart, they can end up in a financial mess and others could take advantage of them. Go over some basics such as paying credit cards on time and how paying late may negatively affect their credit report, how to save money and manage a budget.

Teach kids about taxes: Most teens are unaware of the government’s tax procedures and how they may end up losing a large amount of cash to tax deductions if they are not taken properly. Calculate the amount of money that would get deducted from earnings in taxes and show them how the reduction may affect their pizza night out or Saturday night partying plans. The trick is to speak their language in a way so they know what they will have to give up if they don’t plan.

Maintaining bank accounts: Inform kids about the fees that get charged by banks if they happen to bounce a check or lose their checkbooks. Encourage them to use their ATM cards instead of checks. Explain how tracking their expenses every day will help them manage their budget.

Using credit cards: Ask them if they know about all the fees that their credit card company charges. Teenage kids may km-3know how to use a credit card but most often do not know how much extra they end up paying per transaction. Using a debit card may be a smart move since they can limit their spending and develop healthier habits. Perhaps they already know that a delinquent credit card damages their credit but they may not know how deeply bad credit can affect them in the future.

Invest in stocks: Have a word with your son/daughter about how investing in stocks, mutual funds or bonds may a good move for the future. That being said, also explain the different terminologies used in these fields, what they mean, what the downsides and risks are and how to invest smartly. Suggest a few websites that be helpful and informative for novice investors. Discuss how they can track the benefits of dollar cost-averaging.

Once your kid realizes how crucial it is for them to play smart with their hard earned income, they are bound to be careful. After all that’s what you want, your kid to be money smart and not asking you for money in adulthood.

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