Nowadays, life is becoming increasingly expensive.The cost of living and education is on the rise, while jobs are remaining harder to find. It can be discouraging for younger generations to find such a competitive job market fresh out of college. That’s why it’s no surprise more and more kids are moving back into their parent’s house after graduation. As parents, we only want what’s best for our children and watching them struggle is not an option. However, are we doing them more harm than good? Protecting our kids from the economic realities being faced today, can help them feel secure, but also enables them to become dependent when faced with trying times. Here are a few ways you can continue to help while still teaching them valuable lessons to last a lifetime.
First of all, it’s OK to set limits. Teaching your kids to budget can be one of the most valuable life lessons they can learn. Many kids are still depending financially on their parents well into their 20’s, but saying yes to all expenditures will simply communicate that realty doesn’t truly apply to them. By setting budgets on how much they can spend on food, gas, rent, etc., your kids will learn how to manage their income (even if it comes from their parents) as if they had their own job. Learning how to budget, even during promising times, will keep their finances in order and on the right track for growth.
Secondly, there’s an advantage to saving for retirement as early as possible. One of the most important financial lessons to teach your kids is to save for retirement early. The sooner they start saving, the more confident they can feel about their financial future. Even if they contribute a nominal amount every month, they will be on the path to retiring comfortably when they reach due age. One of the biggest mistakes most people make is postponing retirement planning. With the cost of living increasing each year, its safe to say that planning early is the best way to ensure the lifestyle you expect post retirement.
Thirdly, let your kids know it’s OK to go encounter difficult times. Life is full of them and no one is immune to financial troubles. Even the wealthiest individuals have lost their hard-earned fortunes due to poor financial planning and management. By explaining to your children that tough times are temporary, they will learn to see these moments as mere challenges on the path to financial stability. Remember that your household attitude will also resonate with them. If your family is going through a financial hiccup, remain positive as they will take into account how you manage yourself through tough situations.
Overall, discussing these general principles mentioned above will guide you in teaching your kids how to manage their finances wisely. Understanding the importance of financial planning for the future will ensure your kids are on the right track to financial freedom.