As we discussed in part one of this series for offering budgeting tips to young adults, it’s really helpful if good financial habits are practiced and discussed at home during the formative years, and on into the future as different financial issues and phases erupt.
Listed below are items I suggest you talk about with your kids when it comes to making purchases, borrowing, and saving.
- Before you make a big purchase, sleep on it. Ask yourself one question: What will this really cost me? Sure, a new car is nice, but what will it really cost you? How much interest are you willing to pay? Remember, your car payment usually comes out of your after-tax dollars. How about a good, used car?
- On the topic of college, ask yourself: Can I work while in college to defer the cost? Do I really need to go to a private university or should I start with community college? Do I have plans of going to graduate school? What will that cost? Student loans are one of the biggest consumer issues today! Student loans will be with you long after you graduate—so having a plan will never hurt.
- Create a realistic budget. If you live at home and are working, you should be able to build a financial cushion or help with the tuition; however, everyone should have a budget to work with. I started with a weekly budget. I knew what my bills were, and how much I needed to put away to pay next semester’s tuition and books. Once you have a weekly budget mastered, move onto a monthly budget.
- Stay away from credit card debt. I know good credit is a necessity for many young people who someday hope to purchase a home, and unfortunately, a credit card is one of the easiest ways for a young person to build credit. I’m not concerned about a young person having a credit card. I’m very concerned about a young person carrying debt month-to-month and getting into the minimum payment due game. This could be more detrimental to your credit score than you know. Add student loan debt to credit card debt and the perfect financial storm is brewing.
- Live within your means. I know this is very difficult in today’s society. Keeping up with the Joneses will only destroy your future.
My siblings and I had a comfortable life as children because my parents were frugal. Chances are you want your children to be comfortable as well—so it’s time to stick to a budget and talk to them about money issues.