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FAMILY FINANCES

 Help Children Develop Saving Habits for Future Financial Stability

According to an Experian review of the first quarter of 2019, the average debt held by Generation Z, those between the age of 18 and 22, was $2,057. This constituted an 11% increase since the same quarter one year prior, indicating credit card use, at least by young adults, may be on the rise. Educating kids on how to use credit cards responsibly is crucial to their future financial well-being. The good news is that those who learn and develop good saving habits early in life are more prepared to develop into financially responsible adults. Teaching children the concept of money starts early, from the ages of four to six, by teaching the value of coins and allowing a child to earn money for small chores to save in a piggy bank. By the time a child is seven, an allowance is essential. Familiarize kids with banking by opening a savings account or set up a "family bank" so they can watch their money grow. Also, help them set achievable goals, such as saving for a new toy or putting away for holiday gifts. Also, give kids monthly interest for their savings so they can experience the immediate reward of saving money. For teenagers, clothing, entertainment, and car expenses are the most significant areas of their spending. Some teens also save for college, but few are prepared for the adult world, says developmental psychologist Nancy J. Cobb in Adolescence: Continuity, Change, and Diversity. That's because most teens aren't primed for the responsibility of paying for food, housing, and health care costs. Teens involved with the family budget and who contribute to family expenses learn a valuable lesson. The investment in a financial education starts early, but the returns will last a lifetime.

Tips Your Kids Can Bank On:

+Tip One. Allow your kids to make some of their own spending decisions. Place reasonable limits. Then offer appropriate guidance while giving your kids opportunities to learn from their mistakes.

+Tip Two. Don't loan your kids money every time they want it. Do offer occasional opportunities for them to learn the costs of borrowing and the experience of repaying the loan. Be sure to charge interest on loans, so kids learn the cost of borrowing.

+Tip Three. Teach your child how to set financial goals. Require your child to put at least 10% of each paycheck, or allowance, into savings. It'll be much easier to adhere to as an adult if practiced during childhood and teen years.

+Tip Four. Don't be totally secretive about family finances. Kids have few opportunities to see and experience the financial side of the adult world. This doesn't mean you need, or even should, disclose everything. Develop a detailed household budget. Then explain it so your adolescent can see how your family spends and why.