Things Your Kids Should Know About Money
Parenting isn’t easy. You’re just trying to do the best you can without making too many mistakes along the way. When it comes to talking about money, well, it can be a touchy topic with your kids. So, I’m not here to tell you how to raise your children today. Instead, my goal is to bring a reminder about the importance of financial management in the life of the next generation.
Until recently, I was involved in youth ministry for 6 years. I watched those kids find their way through high school and then into university. Some were more hardworking than others, but at the end of the day, they all wanted to make the most out of life. Unfortunately, the world looks at that burning passion and finds a way to take the most out of them. The bombardment of credit cards, scams, pyramid schemes, gambling, drugs, parties, and the shame of being rejected molds these passionate young adults into something unrealistic. The inevitable truth is that you can’t party forever, and your debts need to be paid back at a costly rate.
Now there are some really smart and wise kids who learned the value of the dollar and who they are in Jesus by the time they hit university. But most kids are still figuring themselves out and what it means to be an adult, sometimes well into their 30’s. There’s no shame in either one; we are all learning on our own journeys. But, there is an undeniable issue with the culture our kids are thrust into, especially if you’ve tried to raise them in a Jesus-saturated environment. As best as you tried to raise them, they will eventually make their own decision about Jesus, their identity, and their future.
Having said all of that, I want to talk about several things that kids need to know to be prepared for their future where they need to make their own financial decisions. Now, you might know some of these or they might be new to you. Either way, my encouragement is that you will lead by example. These passionate students are like sponges for experiences, and while they will probably find it boring, they will hopefully remember the lessons by the time they need it. Otherwise, they might turn to some poor or even dangerous advice instead of asking you for a refresher.
Debt can be useful, but you are playing with fire.
If your son or daughter is getting a degree, they might have to take out some debt to get there. While university or college is an exciting new adventure, the hope is that they will get started on a career that outweighs the cost and interest. The problem is that the numbers can start to feel meaningless. What’s a few hundred bucks on top of my $20,000 loan?
Young adults aren’t stupid, but how are they supposed to know how to handle money if they haven’t had to make such giant decisions before? University is often one of the most expensive endeavors they will ever take, and it happens right from the get-go.
Here’s what they need to be reminded of: to pay back debts, you need to spend time working. Show them a debt calculator so they know exactly how long it will take to pay off their degree and any other debts. They may find this boring, but everyone needs to understand that using debt is like playing with fire. It’s dangerous, you might get burned, and it’s nothing to take lightly.
Know how credit scores work.
Speaking of debt, credit scores help them get better interest rates on loans they should never take. However, that is not what’s important about them. A good credit score will help them qualify for an apartment or even a home with a mortgage. People want to know that they will pay, and having a good credit score will help them get on their feet. Whenever they miss things like a phone or internet bill, they are affecting their credit score. It does NOT have to be a credit card.
The reminder for them: If you don’t take your payments seriously, it will cost you. Everything has a consequence, and being denied an apartment because of a poor score is real. If you have some stories and maybe even a credit report, this would be a good time to bring those up.
Finally, it’s okay to say no.
Your kids are going to be surrounded by people and products, and sometimes there’s going to be pressure to fit in or show off. They will sometimes need to say no to outings, cars, houses, vacations, and even precious snacks, and that will ultimately lead to financial peace in the long term. If they say yes to everything, they will be left with nothing.
The reminder: There are things you want, and things you need. You need to have food and shelter, you only want a movie and a brand new car. Knowing the difference and constantly reminding yourself will help you be content and stay focused on the important things. Perhaps you can share a story about how you said no to something you wanted so that you could save for something better. Alternatively, you can also talk about how you said yes to the wrong things and how that set you back.
These reminders aren’t ground-breaking, but they are important for helping your kids get the right start to financial management. My prayer is that God will equip you to help them live and give the way He intended.
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