Kids & Money

Kids & Money

May 10, 2016

 

You’ve done a great job raising your kids, and they, in turn, your grandkids. You’ve taught them values, responsibilities and respect.  But, have you taught them about MONEY?

How to save it, how to invest it, how to grow it and how to use credit? Many parents have not.    Here is a turnkey program on how to teach your kids about money.

EDUCATE

  1. What is money?
  2. Why do you need money?
  3. Why do people want to take your money from you?
  4. Frugal shopping habits.
  5. How to balance a checkbook.
  6. How the stock market works.
  7. How the economy works.

SAVE IT

  1. Match your child’s allowance. Show them the reward earned when saving.
  2. Split the giving.
    • Divide giving cash and presents between birthdays and holidays, instead of giving only presents. In your greeting card, mention your wish for them to put your gift into savings.

GROW IT

  1. The phenomenon of compound interest, or “interest on interest.”
  2. The Rule of 72
    • Rule of 72 is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest.
    • By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.
  3. Using online growth and savings calculators.
    • Showing them the opportunity to make choices with money over a prolonged period will help build their confidence and capabilities.

 

HOW TO USE CREDIT

 

  1. Understanding interest rates.
  2. What is an APR, or Annual Percentage Rate?
    • APR is the annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents the actual yearly cost of funds over the term of a loan.
  3. How to wisely use credit cards.
  4. Building and maintaining your FICO score

Did You Know?

  • In a recent survey, over half of Americans (54 percent) didn’t know that carrying a credit card balance does nothing to help a person’s credit score.
  • Closing a card reduces your available credit, which increases your utilization.
  • If you pay your bill within 30 days of the due date, it likely won’t hurt your credit score.
  • The number of cards a person has isn’t factored into credit scores.
  • A consumer can have hundreds of credit scores, but they aren’t all equally valid.
  • The most popular credit-scoring model is called FICO; when a potential lender pulls your credit score, it’s probably one of your FICO scores from the three major bureaus.

Source: U.S. News – Money; Investopedia.com

No matter your level of financial education, don’t underestimate the importance of sharing what you know about money with your kids. 

We also invite you to meet with us to align your financial life with your financial goals. Contact us at 775.800.1801 to get started.

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