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Accredited Education: Teaching Your Child About Money And Credit:

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By Mia Bolaris-Forget

So, you want to help your child establish a dynamic future. Besides the basics, such as reading, writing, and “rithmathic”, you may want to help him/her establish some credit…and according to experts (and statistics showing that most adults are in serious credit debt), the sooner, the better.

· Minor Investments: Giving your child an early start is one crucial in teaching them the value of money. Rely on daily activities as a training ground for interaction and explaining essential money management skills. At the bank, encourage your child to help fill out a deposit or withdrawal slip or to actually fill one out on his/her own (just for play and practice). Bring a toy-shopping cart to the supermarket and encourage your child to fill it up with some of the items you will be purchasing. Give your child pretend money and after the cashier rings up the items in your child’s cart, ask him or her to designate the appropriate amount. For older children, use real cash, and encourage them to pay the cashier and tell you how much change they are due back. For even older kids (teens and tweens) suggest having them fill a cart with certain items of their choice and paying with money they’ve saved or earned.

· Learning While Earning: Don’t just give your child money when he or she needs it or asks for it, even if they have a valid explanation. Instead, experts suggest putting your child on a weekly allowance, and basing it on what he or she has earned based on weekly scholastic performance and chores (adequately) completed. Give them the total sum in small denomination and show them how much they will need (from that sum) to complete the activity, purchase, etc., that they requested. Encourage your child to save a portion of his/her earnings and explain what that will mean in terms of saving over the course of a month, several months, and a year. Older children should establish bank accounts, especially savings accounts that will help them with the concepts of saving, making deposits and withdrawals.

· Afford-ability: No one is asking or telling you to deprive your child of life’s vital necessities (food, clothing, some entertainment, culture, and vacation) but experts “do” suggest that you help them differentiate want and need. Sure you want to encourage your son (or daughter) to play hockey or the guitar, but that doesn’t mean he or she needs the most expensive helmet or skates, or more than one of each, nor does he or she need and Ovation or Fender Stratocaster. Give your child the basic necessities and teach them to appreciate and work hard for and toward the finer things in life. Never discourage your child from dreaming “big” or reaching for his or her dreams, simply give them the tools to do it, and explain that he or she can upgrade when he or she “earns” it, and that could mean in scholastic performance (for younger children) or by worker for the money (for older kids). Help your youngster further develop healthy saving and spending habits by regularly reviewing with him or her a “piggy bank” savings chart or bank account and offer incentives such as adding five or 10 dollars for every $25 dollars your child saves.

· A Credit (Card) To Their Growth And Maturity: The only way we all learn is through experience and mistakes. Teach your tween or teen about paying on time and establishing good credit by either giving them a prepaid card of their own, or by giving them access to yours. Teens tend to be more frivolous than frugal with their spending habits, so you may want to limit or monitor your child’s credit expenditures. Offer them the option of charging ONLY expenses they’ve already discussed with you. Ask them to immediately take the money out of their piggy bank or bank account and give it to your for safe keeping toward payment for the upcoming bill (and explain the importance of paying on time to avoid interest charges). For older kids, you may simply want to make sure they write out the full amount of the check when the bill arrives. Don’t forget to go over and explain their statement, interest charges, how it all works, and how it all affects their credit rating.

· A Degree Or Two Of Separation: As we mentioned earlier, most adults are in financial distress with thousands of dollars of outstanding loans and credit debt. Experts agree that these staggering statistics are probably because parents (of previous generations) saw fit to handle their money until they got married or somehow moved out on their own. With all the lessons learned, the most critical years for money management are between adolescence and young adulthood. Remember, you still have some control over teens and tweens. Once they’re off to college and university, you begin to loosen the reigns and relinquish control….and that means allowing them to make their own (often costly) decisions. Living “large”, on a limited income, students frequently find themselves in dire financial straights, including outstanding loans and added (un-necessary) interest charges. A few solutions include: arranging for you to have access to the account so that you can check the balance online, furnishing them with a prepaid card with a certain (budgeted) monthly or yearly limit, providing access to your account or card, but requiring your approval before any and all charges are made, or simply canceling their current card or foregoing getting them one until they’ve successfully graduated college and secured a full-time job. Experts also suggest encouraging them to order their credit profile so they can see the shift in their score based on their expenditures and ability to promptly pay, they’re bound to be in for a reality check and perhaps quite a rude awakening.

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