With increasing debt loads affecting youth, and unemployment rates double the national average, understanding how money and credit ratings work is paramount and a part of their educational needs.
Starting with their allowance, children can learn about how to manage their finances. The key is thinking about how much money you have and where you want to spend it. Children and adults alike are often driven by impulse and don’t think before acting. An environment where youth are responsible for identifying only their wants and not their essential needs is a dangerous precedent that can affect them throughout their lives. It’s simply too easy to spend freely and then find out you don’t have enough left, forcing you into debt.
It all begins with a budget. When giving money to your children in the form of an allowance, or when they get their first job, take the time to create a budget with your child to make them aware of how much they have and where they want to spend it. Encourage them to do research to find out the price of the items they want and price shop to get the maximum reach for their dollars.