Schools can’t teach everything. The early years of a child’s life is in the home and even when he or she starts to attend school parents continue to have the majority of the responsibility for how their children develop and the habits they form. It is not a paid job; the lessons are taught out of love with the aim of seeing children develop their potential and become people who can contribute to society. A young couple’s own parents, family and friends will be happy to provide help and advice but ultimately it is the couple themselves that have to decide what to teach their children. What they should try to avoid is passing on bad habits and one area where that is very important is in finance.
The environment has been changing regularly in recent years but the rules are still the same even if the early years after the millennium saw a degree of complacency that is unlikely to be repeated. It was a time of easy credit when few people worried about building up debt. There was always another credit card company happy to offer 0% finance transfers and an immediate credit line. In addition real estate prices were rising so few people worried about spending; they could always re-mortgage. The recession brought a sudden halt to that and in theory that should have been the end to complacency.
A few years of recession followed with many families struggling under the weight of debt they could not afford. A young couple starting out may well have seen the financial problems that complacency and then recession caused. The lessons should be passed on to their own children; buying on credit can be dangerous as well as costly. Children who see their parents spending on a credit card inevitably think that is the norm. If such spending creates a balance that receives a high interest rate charge at the end of the month because the full amount is not settled then it is a habit that parents should never pass on to their children.
Some of the statistics in the USA are disturbing; almost two thirds of families have no emergency fund that they can use if a financial problem arises. The figures on retirement are no better with the Social Security system under extreme pressure. Anyone that thinks they can rely on that system when they retire are fooling themselves. Children should be taught the importance of saving to avoid joining the numbers that appear to be short of what they need.
Children develop better in a stable environment and that is certainly more likely to be in one where there are no financial concerns. Those families that suffered during the recession because they were unable to meet their bills had to live through troubling times and that inevitably impacted on children as well as those towards the end of college education when the recession began, people who may now be looking to pass on good habits to their own youngsters.
There is no reason to discuss every financial decision with your children but what you likewise do not want to do is to give them a false impression. If you are struggling to control your finances and if as a result you have built up debt on your credit cards then you should as a matter of urgency look for solutions to the problem. If you have regular income then online lenders are likely to look favorably on a realistic application. You will be paying less interest on a realistic loans than you are paying on credit card balances.
You need to act; children can instinctively see when there is a problem and will not necessarily see it as a consequence of spending unwisely or extravagantly. There is an old saying that hopefully no longer applies: ‘Do as I say, not as I do!’ It pays to teach children the right way to manage money; perhaps to give them a few simple chores to earn their allowance. That is a valuable lesson and if parents follow the right rules themselves, hopefully their children will do likewise.