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From Chores to Student Loans: Teaching Kids Money Basics
Special to The Truth
For kids, October is a big
month because it includes the one night where costumes are
encouraged and begging for candy is expected. But it’s also
National Financial Awareness Month, and amazingly, many
teenagers will graduate high school this year with little
knowledge about how finances work, flying blind into a
hurricane-sized storm of potential debt, bad loans,
bankruptcy, and no savings or retirement.
As a parent, you can head
this off. To help, the makers of BusyKid, an app that tracks
kids’ chores and allowance, are offering families tips and
financial basics for getting started.
• Chores. Introduce chores
early and treat them as if it’s your child’s first job. By
changing the mindset around chores, kids can develop a good
work ethic that can carry over to a real job.
• Modern Money. It’s
estimated that less than 10 percent of the world’s currency
is actually paper or coins. This means your child needs to
know how to manage invisible money, including paying bills
and tracking credit and debit card spending.
• Savings. Thirty-nine
percent of Americans admit to having no money in a savings
account. Teach children to save a portion of money they
receive from birthdays, holidays, babysitting, mowing grass,
etc. A good rule of thumb for kids: 50 percent savings, 40
percent spending and 10 percent sharing.
• Sharing. Contributing to
non-profits not only feels good but helps others in need. It
could also provide a tax benefit when your child is old
enough to be filing.
• Investing. If your child
ever wants to retire, he or she will need to invest money
along the way, and practice makes perfect. Luckily, there
are resources available to teach them how, including some
fantasy investing games, as well as apps like BusyKid, which
provides a place to buy real shares of stock for as little
as $10.
• Compound Interest.
Compound interest is when a bank pays interest on both the
principal (the original amount of money) and the interest an
account has already earned. As an example, if you put $1000
in the bank with compound interest of 10 percent, in 20
years you’ll have more than $7,000. Without compound
interest, it would be $3,000. Let your money make money!
• Credit Cards. This is
not free money! Have one card for emergencies or travel, but
make sure the annual percentage rate is low and is paid off
monthly. Your kids will be flooded with offers as soon as
they’re old enough, so teach them to say no, even when
promised gifts for signing up.
• Student Loans. The U.S.
student loan debt is currently $1.45 trillion (an average of
$37,000 per student) and nearly 7 million loans are in
default. Follow this simple rule -- don’t borrow more than
your child will earn in his or her first year out of school.
For more money management
knowledge and practice, enroll your family in BusyKid. Visit
www.busykid.com for more information.
This National Financial
Awareness Month, take steps to prepare your child for a
successful future.
Courtesy StatePoint
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