Finances and Kids

One of the most common requests we receive from our clients is to help educate their children about finances. Whether our clients have been very successful with their financial lives or have learned the hard way we commonly hear that they want their children to do better than they have.  We believe strongly in getting teens and young adults started on the right foot. Below are some basic tips that we feel are cornerstones for financial literacy

Create a budget– A budget is the foundation for a successfully financial picture.  Assigning every dollar of income for a specific purpose will help a person control their money.  Budgets take time and tweaking is necessary especially in the beginning.  Have meetings with either a spouse or an accountability partner to make sure you’re staying on course.

Have an emergency fund– Start with socking away $1,000.00 in a liquid savings account.  This may not happen overnight, but add a savings plan into your budget to accomplish this goal.  Once you’ve hit your $1,000 goal work towards having 3 months of expenses saved.  Savings accounts at a bank or credit union will not earn much interest, but they are liquid and stable.  Use these funds for emergencies only!

Be wary of debt– Avoid unnecessary debt at all costs.  We live in a “have it now” society and buying items we think we need by borrowing is becoming all too common.  Save for the items you would like to have and PAY CASH!  Debt will hang over your head and make you feel powerless.  Already have debt?  Start with your smallest balance and focus on paying it off.  Once you pay it off celebrate your win, but keep paying the same payment to your next debt and so on until you’re debt free. 

Invest for the future– Retirement may seem like lightyears away, but it will be here before you know it.  The younger you start the easier it is to prepare for the big day.  Investing is different than saving.  When you invest you are expecting your money to grow over the long-term.  There are many different ways to invest and it doesn’t have to be fancy and complicated.  I would suggest the KISS approach (Keep It Simple Stupid) Mutual Funds can be a simple way to get started.  Growth investments may be available via a company sponsored retirement plan like a 401k purchased inside of a ROTH IRA.  There are many different investment choices available and you might want to consult with an advisor who understands your goals and risk tolerance prior to investing on your own.

I’ve mentioned just a few simple tips to get your children started.   Since this is such a hot topic with our clients we are going to be offering an educational day at our office. We will be illustrating how to go about establishing an investment or retirement account, how to analyze company benefit plans before accepting a job, how to negotiate for a purchase a vehicle, how to obtain the right kind of insurance, how to minimize taxes and many other topics.

Please reach out to us if you have a son, daughter or grandchild whom you would like to attend and we will get you all the details, availability will be limited. 801-475-4002.

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