Financial Tips for Future Generations
The transition from spring to summer is an exciting time. Young people in particular rejoice during this time of year because it means the end of school for a season. Graduates are excited about moving to the next stage of their lives. Whether moving simply to the next grade level, from high school to college, or from college to career, there is great anticipation for a bright future. However, this bright future can be hampered by being ill prepared financially. In today’s society we are seeing more and more young people that have not been trained in the very basic principles of stewardship. In many cases we see young people that are being thrust into the world having very little knowledge of how to handle their finances. Below are listed some helpful ideas that can be implemented in the lives of young people to prepare them for what lies ahead.
- Teach children the principle of giving at a very young age.
Get children in the habit of bringing their offerings to church every Sunday without fail—even before they have jobs. Once they are earning money, teach children the principle of tithing beginning with the very first paycheck. Teaching people to give God what is His is the greatest financial principle we can teach anyone.
- Open a savings account and teach the principle of saving for the future.
High school students preparing for college should have a substantial amount of money saved by the time they graduate. College graduates should also have been able to save while attending college.
- Teach children to work.
Even before they are old enough to have a “paying job,” teach your children how to work. This will equip them with a work ethic that is of great value when they finally do receive pay for their labor.
- Teach them how to be frugal with the money they do have.
It is important that young people learn early not to make a habit of spending every dime they possess
- Allow children to create expenses, and instruct them about paying debts on time.
As a parent, perhaps you can pay for items directly then have your children pay you back in regular installments with set due dates. This will teach them how to pay consistently and regularly. This also teaches children to think ahead and make decisions with the money they have, without putting future credit at risk during the learning process.
- Have them pay a large portion or perhaps all of the cost of their first car.
- This will create appreciation for the vehicle as well as a realization of the true cost of a car. Young people are far too often given far too much without having to pay anything. Therefore, their perception of the actual value is not realistic.
- Have children pay their own car insurance.
A car insurance company can specify the dollar amount of the premium increase for adding a teenage driver to your policy. When your teen is paying his own insurance, the knowledge that increased premiums resulting from reckless driving will potentially come out of his pocket is an encouragement to drive more safely and responsibly. When insurance rates drop over the years because of a safe driving record, your children will also learn the reward for doing right.
- Assist children with establishing credit.
When the time is right, it would be wise to allow them to open a credit card; perhaps have them use the card only to buy gasoline, for example. Instruct them how to pay the entire bill monthly—and follow up to see that they do.
- Teach children to use modern banking conveniences.
Online bill paying, ATM transactions and other features are important for young people to understand.
- Teach children how to balance their checking and savings accounts.
- Teach children how to invest the money they do have.
Help them to understand the benefits of money markets and CD’s.
- Warn children about the consequences of bad credit.