Thursday, 28 May 2020

How to Raise Financially Smart Kids That Can Buy a Home Early

Written by Posted On Monday, 02 March 2020 11:33
Tips For Raising Financially Smart Children Tips For Raising Financially Smart Children

Raising Financially Intelligent Children

Raising financially smart children will put them in a far better position to purchase things they want at an earlier age, including a nice car and home. Who wouldn't want that? Most kids will reflect later in life and thank their lucky stars their parents were so proactive in their financial education.

There's a reason why we do most of our learning when we are young. It's just easier for kids to absorb information and learn things, which adults increasingly find more difficult as they get older. If you want to set up your children for a financially successful life, you should start young.

Parents can begin the education process by teaching their children about essential financial terms. Learning the lingo and meaning early can only improve a child's chances of having financial success later in life. From housing to mortgages to debt, kids benefit when they learn early about these things.

Raising financially smart kids will lead to less chance of them falling into debt or becoming part of an estimated third of adults who don't have any savings to survive should their income stop.

By educating them from the get-go, you'll increase the odds that they don't have money available to them to cover any emergencies and are living paycheck to paycheck. They are far more likely to end up falling into the trap of payday loans and have difficulty building a stable future for themselves.

For younger adults, the situation is even worse. It is believed that as little as twenty-two percent of eighteen to twenty-four year-olds are financially stable. If these adults had been financially educated children, there is less of a chance that this situation would have developed.

Making Sure Your Kids are Financially Stable

The schools may not help make sure you have financially educated kids, so it is up to you as parents to ensure they are financially literate. Here are some tips to make sure your children get the best financial start to life that will help them through difficult times.

Start at a Young Age

Once your kids start to understand the concept of spending money, they are beginning to form spending habits. This could be as young as four or five, and it is where you should start to educate your children so that they begin to have a better emotional connection with money.

Teaching your kids about being a homeowner is a great way to start. It's a simple concept to understand, and you can easily share some common mortgage terms that will help with their learning process.

Many parents may never help their kids get to grips with financial topics. If parents do discuss financial matters with their children, it could be well into their teenage years, and by that time, many of their economic attitudes will have already been formed.

Start your children off early with the idea of saving money by having a savings jar. Yes, having a piggy bank is smart. This will let them see how their money is growing in the pot when they choose not to spend it. They will then get to see the money in the jar reduce if they decide to use some of their money to buy something they want. This is an easy way to guide your kid towards more responsible attitudes to spending money.

Talking About Your Money Situation

It is difficult to discuss financial issues, and many parents never bring up the topic with their children. But this is a mistake and a missed opportunity to make sure you have financially educated children.

If you decide to talk openly about financial matters with your kids, it avoids situations where they may believe things that aren't accurate or even add to your money troubles without knowing. Being open about your finances lets your children understand what you have to do and why you do it. Showing them how they will need to act when they are older and have the responsibilities they currently don't have to face.

You could start by involving your kids with grocery shopping. Discuss the shopping budget and task them to find you some coupons. It will display the benefits of saving money and how to deal with budgeting for living expenses. You could also get a copy of your credit report and explain to them how it works. Making them understand early about paying debts on time will be essential to their financial development.

Getting them introduced to a company like Credit Karma who does credit monitoring could also be a prudent move. Building and improving your credit while you are young is one of the smartest things you can do.

Set Them Up with Financial Products

Make sure your children have savings accounts so that they begin to understand how the financial system works. It will make sure that they are more financially aware and give them some experience with financial products.

If they get the chance to handle some aspects of their financial life at a younger age, then when older, they are less likely to run into issues where they will need their parent's assistance.

In other words, you might not have to help your kids buy a home if they become more financially independent earlier in life.  At a younger age, they can't really get themselves into much trouble, and as a parent, you can keep an eye on the situation, making sure all is well.

If you are lucky, you'll avoid having to co-sign a loan for your children to buy a house, as this has become more commonplace. The amount of student loan debt has skyrocketed to the point where it stops many from being able to purchase their first home. Parents often need to provide assistance.

If they are taking their own decisions on what they do with their money, regardless of the outcome, it will be a learning experience that should put them in a good position for when they are older. It allows them to suffer the consequences, hopefully without serious repercussions of their decisions and leads to better financial habits in the future.

If your kids understand the consequences of their debt, they'll be more cognizant of having a plan that includes detailed timelines for payback.

Final Thoughts on Raising Financially Educated Kids

Making your kids more educated about all things finance is a smart goal for any parent. One of the greatest gives you can give a child is knowledge. By teaching early, you'll put your kids in the best position to succeed later on in life.

While most kids won't know it right away, later on in life, they will reflect back to all the good your teachings did for them. You'll feel proud knowing you played a significant role in your child's development and success.

One of the things I will always be grateful for is my parents teaching me early on about money. Doing so allowed me to purchase my first home at the young age of twenty-three. Becoming a homeowner at such an early age put me well out in front of my peers. It also put me on a financial track of independence.

Other Helpful Real Estate Resources

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Use these additional articles to make excellent real estate decisions.

About the author: The above article on how to raise financially smart kids was written by Bill Gassett. Bill is a nationally recognized Real Estate leader who has been helping people buy and sell property in the Metrowest Massachusetts area for the past thirty-three plus years. Bill has been one of the top RE/MAX Realtors in New England for the past decade-plus.

In 2018 he was the #1 RE/MAX real estate agent in Massachusetts. His real estate advice has been featured on CNBC, RIS Media, National Association of Realtors, Today.com, Inman News, Placester, Credit Sesame, and others.

Bill covers real estate sales in the following Massachusetts communities: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.

Reach out for Bill's advice anytime you need it.

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Bill Gassett

One of the top RE/MAX agents in New England over the last decade plus. Providing exceptional real estate services to buyers and sellers in the Metrowest Massachusetts area including the following communities: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.

See my real estate website at Maximum Real Estate Exposure - one of the most visited real estate sites in Massachusetts.

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