Finances, Cost of Health Care, Savings Account, Budget and Talking to Your Kids
Our finances and our health are two of the most pressing issues that we face throughout all of our adult lives. It’s not too coincidental that health care and the state of the economy are two of the biggest issues facing both presidential candidates in the 2008 United States presidential elections. Most adults, whether they are single, married or married with children have two huge issues constantly facing them right now, the economy and cost of health care.
What about our kids? Are they shielded from all of this? Is ignorance bliss? Or do they have concerns too? A survey of 500 U.S. teenagers released recently found that almost 70 percent feared an “immediate negative impact” on the security of their families (Brigid Shulte, Washington Post). That’s a huge figure. This shows that there is anxiety about this among our kids. Children and teens are aware of the fact that many of them are not getting as many things from their parents as in the past and the family is not going on that nice vacation. They know that something is going on. Here are a few tips on talking through the economy with our kids.
- The importance of a savings account. The first thing we should discuss with our children is the importance of starting a savings account early and the compound of value of money. The earlier they get into the habit of saving money, the better. As they see their money start to grow it will (hopefully, at least) inspire them to continue building and not steal from the account. It wouldn’t hurt to “wow” them with a couple of figures. For youngsters tell them that if they invest $10 per month and are able to earn 8% interest in 30 years they would have almost $15,000. For teens, if they invest $100 per month and are able to earn 8%, in 30 years there would be $149,000. And maybe for your college students that if they invest $200 per month at 8% it would turn into $298,000 after 30 years! Certainly, this could be a nice help toward early retirement.
- The importance of a budget. This principle can be taught very early in life. If you give your children an allowance give them a few jars to go along with it to divide the money into. This would include a jar for charity, a jar for fun, one for special items, etc. Once again, if this ideal is instilled early in a child’s life, it is much easier to maintain. Knowing where your money goes and allocating it sensibly is important for anyone of any age.
- Don’t avoid talking about the economy. Even if you don’t understand everything that’s happening nationally, talk about the fact that you don’t know and try to figure it out together.
- Don’t panic. If money is tight, talk with your children about how you can reduce the grocery budget. Discuss ways that they can help. Involve the kids all the way through the decision process.
- Don’t talk over their heads, don’t ignore your kids, and don’t treat them like idiots.
- Discuss the use of credit cards. Don’t be afraid to tell them the truth about credit cards; they can be used properly or they can be the worst nightmare a person has ever experienced. They can totally shatter a person’s finances and send him/her to straight to bankruptcy (without passing GO) if misused. Warn them about not paying their credit cards in full every month and the exorbitant interest rates that are charged. Remind them that these interest rates keep compounding every month if not paid off.
- A discussion on health is critical too. Make sure that your children know how precious their health is. Even with the rising costs of health care it is absolutely necessary for everyone to make every attempt to obtain health care. Help your children to understand that health insurance is mostly for the effects. They also should set some of their budget aside each paycheck for prevention in the form of nutritional supplements, vitamin supplements and exercise.
Good solid discussions like this with your children can relieve much of the anxiety they are experiencing. You will be teaching some excellent life long habits as well. What about us adults? What about our anxiety? The biggest bit of advice that I can give adults (myself included) is to get out of credit card (or anything like it such as home equity) debt as fast as possible. Once we are out of this kind of debt, don’t fall back into it. Pay your credit cards off in full every month and enjoy the peace of mind that will come from doing so, especially in times of economic uncertainty.
Tom Thorne
www.Feelingoutstanding.com
Comments (2)
Great article and good advice. Thanks for sharing.
Nice article and of course good advice.
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