How Kids Avoid Bankruptcy
How Kids Avoid Bankruptcy – 5 Tips
Teaching your children solid financial know-how is something that every parent should do. There are many basics that kids can learn, but it is also important that parents learn how kids avoid bankruptcy. This isn’t something that kids will be thinking about, and it is a topic that people generally think only applies to adults, but kids should be aware of it as well. These helpful tips will guide kids and parents in making good long-term financial decisions.
Tip # 1
Teaching kids to effectively employ budgeting techniques is a great way to help them live within their means. Tracking income and expenditures gives an undeniable picture of what funds they have available, what their spending habits are, where they can find opportunities to save money, and when they are getting close to running out of money. These are basic principles, but many adults don’t even follow them. Learning these money habits early on and making them a part of their automatic thought processes will benefit your kids throughout their lives.
Tip # 2
Forward planning and preparation are key factors in avoiding financial crisis. Unforeseen events are a part of life for everyone, so teaching your kids to save money on a regular basis will show them the value of a financial buffer. For example, they may accidentally damage a bike or musical instrument just before an important competition, but if they have money saved they won’t have to miss out on a valued opportunity. It is key that parents don’t bail kids out on matters where the kids are responsible. Doing so will only reinforce a false sense of financial safety that likely won’t be there as they become adults.
Tip # 3
Helping your kids learn the difference between solid financial investments and high risk ones will enable them to avoid these types of pitfalls more easily down the road. A common cause of bankruptcy is making foolish decisions on offers or investments that seemed too good to be true initially. Kids need to learn that get rich quick schemes are just that – schemes – that will take your money fast. Sinking a bunch of money into a friend or acquaintance’s proposal either through peer pressure or because of false hope, is one way people lose their money and find themselves in a position of bankruptcy. Your children need to learn the power of saying no, and be able to knowledgeably assess opportunities, so they can weed out the bad ones.
picture source : http://www.moneywalks.com/
Tip # 4
Your kids need to appreciate the value of stable employment early on. Nowadays, kids that are old enough to work don’t always show much loyalty to their employer. Educating them in the importance of a good work history, maintaining a regular income, and how it will provide them financial stability for their future, can help them avoid financial crises down the road. Adults who have spotty work histories are at much greater risk for bankruptcy as they are more prone to missing mortgage and credit card payments.
Tip # 5
It is important that your kids understand that credit is not simply a source of easy money. As kids get older, they may get their first credit card, and think that it is extra money for them to spend. As a parent, it is vital that you instill the understanding that it is still their money they will be spending, and that the consequence of not paying the balance off each month is escalating interest charges, which may eventually, and possibly quickly, exceed their ability to pay them off. Not paying minimum monthly balances will damage their credit rating, and will make applying for future credit arrangements such as mortgages much more difficult for them down the road.
Bankruptcy is a devastating life event that can be easily and effectively avoided by making sound financial decisions throughout your life. Learning how kids avoid bankruptcy will help the younger generation to be aware of the consequences of their financial actions and life decisions. Awareness and knowledge of sound financial decisions leads to a healthy future free of money crises such as bankruptcy.
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13 Comments to “How Kids Avoid Bankruptcy”
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It is imperative that we teach our kids to save now. It is evident that Social Secutiry is probably not going to be there when they retire. Many of those, who in the past, depended to retire on their Social Security Checks found that they could barily survive. In 2010 many Seniors will be shocked after they see that the amount of their check will not increase over 2009. For the first time in 3 decades the cost of living adjustment will not be there. We can’t depend on the Government to pay our bills. We have got to save early in life so that we can enjoy those “Golden Years” in retirement.
Thanks for the great info! I have been seeking the right way to start teaching my 10 and 14 year olds how to be frugal…
Traci
Some very good points! Teaching and securing our kids futures financially is very important. If you set the foundations correctly and build in routines along with awareness, this will help the child understand values, but bearing all that in mind, one of the most crucial factors and lessons to be thought is the appreciation of loss. If a child understands the full reality of loss, it will help them give more value to what they have.
Is that too early to teach them such stuffs?
I don’t think it’s to early for them teach this. Starting at a young age has the advantage in making a right decision for them and I hope some of the kids would appreciate an article like this.
I really enjoyed the reading of “How Kids Avoid Bankruptcy”. I have a site on Retirement and Retirement Planning and one of the questions we have is on the subject of Bankruptcy and how it affects the Credit Score of the ones involved. If the younger generation would only pay attention to the details of their monetary lives. Good article and thanks for the info.
If you fixed the foundations adequately and build in routines and awareness, this can help the child appreciate values, but bearing so much in mind, one of the more crucial factors and lessons to generally be thought is this appreciation of reduction. If a child understands the entire reality of great loss, it will assist them give more value from what they have.
Wonderful idea! Children ought to learn how to secure themselves even at young age. Unpredictable circumstances may come they way and it is but important that they realize early on how crucial it is when odds confront them. Thank you for posting your article. This will surely bring awareness among parents who never thought of it before.
Great blog idea! And very helpful. It is so good for us to learn about financial aspects of life before we have kids, so we will be prepared.
This is great advice. I think every parent would love to teach their children how to be great with money. The problem is most people aren’t great with money so they don’t know what to teach. The worst part is clueless people often don’t even know how clueless they are!
This is great advice. I wish my parents had gone over this with me when I was younger, it would have saved me a lot of grief as I went through college. I’m definitely going to be more informative with my own kids.
will kids be bankrupt?they have their parents to pay everything.
Starting early has its positive benefits especially if influenced in a good way, financially. There are times when kids think that the money they have can be spent until the last penny. This attitude, when ingrained can affect them when they become adults. These suggestions are sure helpful in providing parents and children with guidelines in practicing self discipline and monetary stability.