4 Tips for parents who want to make their kids the best money managers

The cloud of financial uncertainties in the last 5 years had twin effects on parents. Firstly, they have become more concerned about their kids' financial future. Secondly, they are more interested to go for one-child family.

One and done – This is the new trend amongst parents

Being a parent is not a joke. Parents have to take the responsibility of overall development of their children. The rising living costs, education expenses and the weak economy have made parents wary of having more than one child. In the last few decades, the percentage of women (in the age group of 40 and 44) giving birth to only child has increased rapidly. According to the latest report of U.S Census Bureau data, the figure has increased from 10% in 1976 to 19% in 2010.

Recession and slow recovery rate had always made a direct impact upon the nation's fertility rate. Couples postpone their plan to have kids till the economy becomes better again. No one knows when the nation's economy will finally become normal again. So, nobody has any idea when couples will have enough confidence to have as many kids as they want.

Parents are more worried about kids' financial issues than ever

Recently Citi Consumer Banking employees conducted a survey amongst 1500 parents. The result of the survey highlighted the following facts:

  1. 56% of parents are not convinced that their kids will have a better financial future than theirs.
  2. 71% parents feel that their kids will face a big problem in saving for a home.
  3. 71% of parents are not sure if their kids would be wealthy enough to buy a car or further education.
  4. 69% parents feel that children would always worry about not having sufficient money for rainy days.
  5. 69% parents think that their kids will be anxious about their children's financial issues.

Parents are taking steps for their kids' bright financial future

Worrying would not help to achieve anything. Parents have understood this fact very well. As such they have started giving money lessons to their adorable kids. Almost 9 out of 10 parents involve children into various kids of financial education activities nowadays. They're coming out of their shell and discussing family financial issues in front of their children. Some are even taking their kids to banks to give them a practical experience.

How parents can make their kids the best money managers

Honestly speaking, on the personal financial side, parents should have a goal to find a great career for their children. More importantly, they should always strive to make their kids financially responsible citizens of the country.

Here are some tips that may help parents to make their children better money managers than themselves.

  1. Plan before making big purchases: Who does not want to buy magnificent homes and flashy cars? Everyone does. However, lack of proper planning and financial knowledge can have an adverse effect on life's big purchases. As a parent, you can help children avoid this by initiating discussions on these topics. You can share your experience with them so that when they grow older, they can avoid making costly mistakes.
  2. Give an allowance to make them responsible: A daily or monthly allowance can help your kids to be responsible spenders. Allow your children to use their allowance as per their wish. This will help them understand the rewards and consequences of spending allowance as per their heart's desire. Besides, you can tell them about the mistakes you did in the past so that they can learn from them.
  3. Initiate conversations about money: One-third of Americans are in debt. So, it is quite natural to apprehend that your kids will accumulate debt or be totally unprepared for emergency situations once they become adults. But it is not necessary to wait and watch your kids making financial mistakes. Rather, you can teach money management tips to your kids and make them financially responsible citizens now.
  4. Don't hesitate simply because your children are small. Teach saving tips to your kids. Share your secret shopping tricks with them. Once they are little older, make them understand the value of emergency fund.

  5. Make plans for education: Several parents worry about the rising cost of education. As a responsible parent, try to save money in 529 plans when your kids are very small. Besides, ask your children to contribute a portion of their allowance to 529 plans. This will help them understand the concept of saving for better future.
  6. Ask your kids to consider the following factors when making college decisions:

  • The tuition fees and other expenses
  • Student loan trends
  • Option to study within your means
  • Final thoughts

    Finally, try to be less tensed about your kids' financial future. Don't fear that your kids will make mistakes for sure. Instead of getting worried, help your children to walk on the right financial path. Teach your kids to ask 3 questions to themselves before making any financial decision. These 3 questions are:

    1. Do you have enough money to buy a particular product?
    2. Do you really need the product?
    3. Are you getting the best deal in the market?
    4. Is it better to wait till you've enough money to buy the product?

    The answers of these questions will help your children manage finances wisely. They can improve the quality of their lifestyle without breaking bank.

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