Raising Money-Savvy Kids
Post date: 7/1/2021
Availability and special terms subject to change.
At First United Credit Union, we’re here to help your kids succeed at all of their financial firsts.
Your Child’s First Account
The sooner children begin learning about money and finances, the better chance they’ll avoid the mistakes many adults make today. They’ll also be more prepared to navigate the complex financial world as they grow up.
Here are some ideas to teach your kids the value of money.
- Open a First United youth account in your child’s name. Don’t worry about the dollar amount. What you’re depositing doesn’t matter as much as focusing on regular savings habits.
- Set a savings goal — with your child’s input. Just like adults, when kids have a purpose or goal to save for, it makes them more motivated to stay on track.
- Include children in your family’s financial discussions. While it can feel uneasy talking about money with your kids, sharing your experiences and letting them see how you handle money is the perfect way to get them started. Help them establish sound financial habits before they’re forced to make their own decisions. All can provide a solid financial foundation.
Check out our Saving Sailors and eSavers Clubs!
They’re the perfect accounts to get your kids started on a strong financial future. You can also have a small amount payroll deducted into your child’s account.
Your Teen’s First Budget
Integral to your teen’s financial education is learning to budget.
Teens often have a good chunk of disposable income, and as a parent, you can help them learn to budget their money and make wise spending decisions. As your teen grows older, expenses start to increase, too. So it’s never too soon to begin tracking where money is spent, saved, even wasted. This is where a visual budget can be an excellent teaching tool.
Click on the link below for an easy budget worksheet you and your teen can work on together. It will help your child see where most of their money goes. By recording income and expenses monthly, both of you can see where changes need to be made.
Click here for your teen’s first budget worksheet.
After reviewing their budget, your teen may decide they need to increase their income. You can offer ideas on earning money like doing more odd jobs at home or taking on a part-time job.
When more money goes out than comes in, it’s time to help your child make better choices.
Maybe it’s time for your child to cut back on iTunes, movies, fast food, or clothes shopping. Like adults, making sensible choices and cutting back on frivolous expenses can help your teen save something bigger. This is what leads to solid lifelong financial habits – learning to live within one’s means.
Your Kid’s First Car
Buying a car is probably the first major purchase your teenager will make…and is often made possible by applying for a loan. Whether your teen has help from family or friends to finance a car, your child should understand their options, including a First United loan. And learning how financing works, your teen will soon realize the cost of credit can vary — a lot.
Even if your teen is not getting a loan for their “first” car, it’s a great exercise to have them know how to shop for the loan as well as the car…and the “buyer beware” philosophy should apply to both.
Understanding the cost of credit.
Consider all the factors that comprise a loan payment, including the annual percentage rate (APR), which can be as high as 21% at some institutions, the length of the loan (term), and repayment amounts and/or penalties. Rates may also vary based on the person’s credit history and security (or collateral) offered.
Compare the monthly payments to income. Can your teen afford it? What will your teen have to give up for the payments to work?
Car dealers, banks, finance companies, and credit unions are all available sources of credit. But, be prepared to help your teen shop around for the best deal. We encourage you to bring them into First United CU to learn more about the lending process. And be honest with your child about the expenses they can anticipate from buying and driving a vehicle.
It’s a great conversation to have – and can produce a reality check when it comes to financing a first car.
Your Grad’s First Real Job
If your child is a recent college graduate, it’s time to take the initiative and prepare for employment in the adult world and prioritize debts and student loans. As your child’s financial partner, we’re ready to help. And remember, once a member, they are a member for life!
To make the transition from college to the work-world go smoothly, our partner, GreenPath Financial Wellness, offers a top ten financial checklist for recent college graduates:
- If you don’t already have a job lined up, contact your student loan servicer(s) immediately to ask for a six-month deferment.
- Pull a free copy of your credit report at www.annualcreditreport.com or any of the three credit reporting agencies.
- Look for credit cards you may have opened while in college (to get the gift!) and consider closing those accounts you don’t plan on using.
- If a prospective employer requests a copy of your credit report as part of the application process, be prepared in the interview to be up-front about any negative marks on your credit.
- Check with your registrar’s office to ensure you do not owe anything to the school (library fines, parking tickets, etc.).
- If you’re moving after graduation, complete a form at the post office to have your mail forwarded to your new address.
- Keep your expenses as low as possible while you’re getting started.
- Develop a budget — a plan for your spending — early on.
- Once you land that first job, use this as an opportunity to develop good saving habits.
- If you are paying exorbitant rates on your credit cards, struggling with the amount of your minimum payments on credit cards, or need help developing a game plan for your finances, contact First United CU.
No matter where life takes you, we’ll always be there to serve you!
Source: GreenPath Financial Wellness, https://www.greenpath.com/credit-and-debts/.