67% of 18-24-year-olds have less than $1,000 and 46% have $0! Today’s video I will give you 5 things you can do to set your child up for success financially plus a bonus tip at the end that I JUST learned that can start helping your child build credit before their 18! Step #1 set […]
Today’s video I will give you 5 things you can do to set your child up for success financially plus a bonus tip at the end that I JUST learned that can start helping your child build credit before their 18!
Step #1 set yourself up strong financially first, remember that one of the best gifts we can give our children our ability to take care of ourselves in retirement.
I know we all want to do everything we can for our kids to make sure they have a great life, but sometimes that means taking care of yourself. make sure you have your emergency fund established, high-interest debt paid off, and a retirement account established with a contribution plan in place. Our example teaches more than words ever can, but that being said,
Step #2 is to talk openly about money- it’s ok to let your kids know how much you make and have or don’t have.
Give real reasons why you don’t want to buy something for your child, saying “I can’t afford it” or we don’t have money for that can be really confusing when they are also seeing you buy other things. You don’t want to make your children feel bad for asking for something. Instead, teach them why you sometimes say yes and other times say no. It can be something like “it’s not in our budget this week” or we are choosing to spend our money on other things this month.
Our language is powerful, so be mindful of how you speak about money around your children- this is great for yourself too. Saying things like, money doesn’t grow on trees or making your kids feel bad for ask for something creates deep-seated money issues that they will have to unpack later in life- you probably have some money mindset stuff to work on from your past if you think about it. We all do. Instead of saying we’re broke, say we haven’t saved enough for that yet, if it is something you are saving for, or let them know they can add that to a savings account list and take turns letting different kids get something off the list each month and tell them how you save some of your paychecks for that- which is why you go to work. Or if your child works, teach them to save up for their own things.
Step #3 Teach your children about saving.
Give them an allowance if you can and help them save $1 or $2 from every $10 they make. You can create two accounts for them which can be simple jars or piggie banks at first. One for shorter-term things they will want a larger sum for, like a car down payment perhaps. The other half of their savings can be for long term savings like retirement or a business in their adult future. Lead by example for this by letting your kids know what you’re saving up for.
Step #4 If they’re old enough each them about investing.
Open a custodial investment account for them once they have a bit saved up and you think they really won’t need money from the account for a while. You can start with any amount. I have a full breakdown of how to open and invest in a custodial account in this video.
Step #5 If you want to reduce the financial cost of college for your child, opening a 529 savings account will be a great way to get more from your money because the funds used for college expenses may be tax-deductible now and received tax-free later.
This is a great place to have family contribute for a birthday or other holiday gifts and here is a full video on how to establish one, so take a look if that’s something you want more information on.
Lastly, this is a bonus tip that I just learned about and was like wow- how did I not know this? It’s to add your child to your credit card as an authorized user to help them start to build credit. Most credit card companies allow you to do this when your child is 13 or even sooner than that. A couple of things to note here are to make sure you are educating your child about how credit cards work and make sure you trust they aren’t going to make a bunch of purchases on your card that you can’t afford or don’t approve of. Also, only do this if you have good credit and are confident that it will stay that way. If you have bad credit, then adding them on may hurt more than help them.
Let me know in the comments which tip you found most helpful. If you’re interested in more individualized financial guidance I am offering one on one sessions which you can find more info on below. Thanks so much for watching, remember to subscribe if you’re new here and I’ll see you next week! bye!