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|04-19-2007, 09:49 AM||#1|
s/o thread...how do you teach your kids...
I'm reading a lot of posts in the off-topic threads about the collective financial situations on here. I think these lessons are learned (or not learned) when we are growing up.
I was never taught about money. I watched my parents juggle bills just to make ends meet, and then my dad would come home and "inform" my mom about his latest $10K purchase! We had a big house and a big family, but it was an EXPENSIVE house to run! They were always maxed on cc debt. I was 13 before my mom bought her first new car ever (and it was a diesel Escort...nothing fancy). Growing up that way, I've done things differently with my kids.
1. My kids do not get an allowance. They are not given specific chores. If I ask them to do something, they are expected to just do it.
2. They do NOT have savings accounts.
3. They DO (in place of savings accounts) have "credit accounts with the Bank of Mom & Dad).
4. We pay for their needs; they pay for their wants.
My thoughts on the above: Children should be helping out because they are part of the family; no pay for that. They get extra jobs as they request to earn money. They can keep this money IF they do not have to pay the "Bank of Mom & Dad" any money back. If they have debt with the BOMD, then they have to pay that off first.
Each kid has a credit account of $20. They can spend this how they choose. HOWEVER, they canNOT go over the limit, and they have to keep track of it. I don't care what they spend it on since it is their credit they are spending.
What we are teaching them is to live within their means and to spend their credit wisely. My son even mentioned one day about how he could not remember what he spent his credit on that made it unavailable, but he was still paying for it. YUP...that's the point!
If they can manage credit when they are adults, then they will be able to save easily. We all pay a LOT of money in interest. How many of us would be just fine if we had $0 in cc debt?
Also, they are taught the effects of paying off their house early. We add at least an extra $100 to our house payment each month. My son (almost 13) understands interest versus principal and how much of that payment was going out to interest each month.
We also put off buying our house until we found the right one for us and got it $20K less than the asking price. He asked why we did this because he knew rent was paying someone else's mortgage and not ours.
He understands that home ownership is more than just the payment; you have maintenance, insurance, etc. This house was well maintained, so we have very little work that MUST be done.
Anyway, those are the ways we are preparing our kids. Credit is being viewed as a backup. They are working off their own debts. They are responsible for themselves. So far, it seems to be working.
Any other ideas?
|04-19-2007, 10:07 AM||#2|
Re: s/o thread...how do you teach your kids...
I believe that children should handle both real money and also the concept of money as in debit cards and or checks. I think that all children should handle money that goes in their hands and they should learn their mistakes as children and not adults. I don't think that it should be controlled by the parents because once that control is gone, especially if it was tight control, spending can become a little crazy. I think children should be taught about saving money as well and think they should be taught to pay themselves first and I also believe in paying tithing so I will teach my children that as well. The money leftover after that is up to them. I will give plenty of suggestions and advice when appropriate but ultimately I will let them see the results for themselves. I don't really believe in credit except for things like houses, cars and school so I will be teaching them the concept and also helping them when it comes to a strategy for purchasing their first car but I don't want to teach them that it is okay to have a credit card for regular purchases. Credit cards for emergencies are different. If my child want something badly I want them to learn the art of saving and planning for it, not seeing what they can do to get someone to give it to them until they can afford it. I'd like to try and impart patience and perseverance and a lack of entitlement.
I also believe in giving an allowance but not in relation to chores, chores are being part of a family. Allowance is primarily as a teaching tool and as a form of independence (in my family). My children will all have their own bank accounts which they will be responsible for. I plan on them having a lot of involvement with money and finances in general and plan on trying to de-mystify it and make it a regular mundane part of life. Because it is and people who view money as a prized possession tend to have lots of problems with it (keeping it, that is). LOL.
Anyway, that is how I view things so far but I am open to changing my mind as I have done so many times in the past. I change my beliefs as my experience grows.
Whoops, by the way forgot to add that my response is not in attack of yours or what you do at all. Some of the things we've said are the same. I just felt like putting out my philosophy instead of replying to each of your points. I hope that makes sense. I'm not trying to counter your opinions just state mine.
**Jessica** Mom to DD: Camden 12/04, DS: Garrett 8/08, DSD: Mikayla 2/00 and Angel Baby's lost on 11/15/07 and 6/14/10. Expecting a new addition to our family in May 2012.
My Blog:Our Learning House
Last edited by camdensmommy; 04-19-2007 at 10:10 AM.
|04-19-2007, 10:18 AM||#3|
Re: s/o thread...how do you teach your kids...
What I keep witnessing is all of these kids turning 18 with no concept of what credit it. It is sad. They think of it as unlimited free money to spend; why not, the $10 minimum payment is not so bad, right? Well, there are fees on top of fees on top of fees, and they will never pay it off at $10 a month. This is what I want the kids to understand.
I also had a talk with my niece one day. My sister (her aunt) as well as her own sister would constantly call and ask her for money. Dear niece has a really big heart and wanted to help out.
So I talked to her about what is financially helping out and what is enabling, a concept I doubt any of us learned other than the school of hard knocks. I talked to her about how she could be really useful, rather than being a handout. Also, we talked about what bad financial decisions do to your future (college student). No one had every told her these things, and her eyes were bugging out!
We talked about what it means to cosign a loan. What happens if someone (like my sister or her sister) asked to "borrow" her credit card...what could they do with that information? (These are devious people we are talking about) How many purchases could they make without her knowledge? My niece was using her credit as a backup plan for when things were tight. That is great! We talked about the interest on them and paying them off each month.
I didn't tell her what to do, but I did explain to her the bigger picture of some of these decisions. Then I let her do what she wanted to. She used a lot of the knowledge and admitted that it was great to know what others were not telling her.
I firmly believe if we all knew how to manage our credit better, we would have a lot of extra money to put into savings.
I'm amazed at how many people take out second mortgages on their homes to pay off credit card debt. Problem is, they haven't learned to manage their credit any better. Quickly, so many are saddled with a second mortgage AND maxed out credit again because they didn't figure out what go them there in the first place.
Guess it is all that bigger picture. I know my kids will make mistakes...I just don't want them paying for them until they are 50!
Last edited by bean3; 04-19-2007 at 10:19 AM.