Lessons About Money Can Be Price­less Gifts to Chil­dren

Calhoun Times - - FRONT PAGE - De­wayne Bowen

valu­able lessons.

These lessons can in­clude the fol­low­ing:

- Set­ting goals – If you are con­tribut­ing to an IRA and a 401( k) or sim­i­lar em­ploy­er­spon­sored plan, ex­plain how you build these ac­counts now, while you are work­ing, so you’ll have enough money to en­joy a com­fort­able re­tire­ment some­day. And you can bring your chil­dren into the picture, too, by telling them that an­other fi­nan­cial goal is sav­ing enough to help send them to col­lege or to fur­ther their ed­u­ca­tion in other ways.

- Value un­der­stand­ing fi­nan­cial of the fi­nan­cial mar­kets – You may ac­tu­ally be quite sur­prised at how in­ter­ested your kids are in in­vest­ing, es­pe­cially the con­cept of “own­ing” com­pa­nies through stocks and stock- based ve­hi­cles. De­pend­ing on their ages, you might even want to show them the progress of your own in­vest­ments and de­scribe, in gen­eral terms, how dif­fer­ent events can cause the mar­kets to rise and fall, es­pe­cially in the short term. You could even dis­cuss the dif­fer­ence be­tween the ba­sic types of in­vest­ments, such as stocks and bonds.

- Putting time on your side – You might want to em­pha­size the im­por­tance of pa­tience, and how in­vest­ing is not a “get- rich- quick” scheme, but a process that re­quires decades of dili­gence and per­sis­tence. Let your chil­dren know that it’s of great value to start in­vest­ing as early as pos­si­ble, so you can put time on your side, giv­ing in­vest­ments a chance to grow.

- Liv­ing within your means – We all know that you can’t al­ways get what you want. Stress to your chil­dren that you can’t just splurge on big pur­chases when­ever you feel like it, be­cause such be­hav­ior can lead to bad out­comes. Use con­crete ex­am­ples: If you have a car that’s sev­eral years old, tell your chil­dren that it would be nice to have a new one, but you sim­ply must wait un­til you can af­ford it.

- Pay­ing debts on time – Tell your chil­dren that, no mat­ter how good a saver you are, or how thrifty you try to be, you still have debts, such as your mort­gage pay­ment, and it’s im­por­tant to pay these debts on time. You may not want to get too de­tailed about the con­se­quences of miss­ing debt pay­ments – bad credit scores may not be that easy for chil­dren to un­der­stand – but you can cer­tainly men­tion that if you’re al­ways late on pay­ments, you might find it harder to bor­row money when you re­ally need it.

By shar­ing these prin­ci­ples with your chil­dren, you will, at the least, give them some­thing to think about, and you may well find that you’ve helped start them on the path to a life­time of mak­ing solid fi­nan­cial moves. And who knows? If they truly mas­ter the ideas you’ve taught them, one day they might give you some re­ally nice Fa­ther’s Day gifts.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.