The Generation Gap Passing Sound Financial Practices Down The Family Tree

The Generation Gap Passing Sound Financial Practices Down The Family

The Generation Gap Passing Sound Financial Practices Down The Family Tree
In our world of​ keeping up with the joneses, it’s an everyday struggle to​ resist buying the latest, greatest toy to​ wow our neighbors with. But how did we come to​ be this way?
If you’re a​ Baby Boomer, your parents probably weren’t like this. They were too busy trying to​ feed, clothe, and provide shelter for their families; everything else was gravy. But in​ today’s world of​ borrowing, credit and instant gratification, seemingly anything we want, we can have. We pay for it​ for years, and thanks to​ interest rates, we end up paying a​ lot more than actual sticker price. But hey, we have it​ now, right? Thing is, if​ we step back and think about it, we can learn a​ lot about finances from our parents. We can also pass that info on—and then some—to our kids, creating a​ lineage equipped with sound, smart financial knowledge.
Teach them about today’s money
Spending isn’t like it​ used to​ be. Through the prevalence of​ checks, credit cards and debit cards, cash is​ a​ rarity in​ today’s world. But it’s important that our kids understand where money comes from and how it’s used. When you plop down the plastic for a​ purchase, let your kids know that the money is​ either coming directly from your bank account, or​ a​ bill will arrive in​ the mail which you will soon have to​ pay. When at​ the ATM, tell them that cash isn’t magically coming out of​ the box. it​ was put there from your work, and its money you earned. as​ they grow older, instill more sophisticated lessons into their lives. Tell them about late fees, interest and the importance of​ saving. The early you start teaching your kids about finances, the better off they’ll be.
College quality counts
Studies show that fouryear undergraduate degrees are now the norm in​ the working world, and in​ order to​ stand out, a​ graduate degree is​ necessary. On average, the income of​ someone with a​ master’s degree was nearly $10,000 greater than that of​ a​ person with a​ bachelor’s degree. Also, the higher rated the college your child attends, the more they will make. Start saving now for your child’s education, and be prepared to​ shell out extra over the long run if​ need be. It’s proven that the amount they will make after college will easily outpace the extra cost incurred by attending a​ bigname school.
Save, Save, Save
Don’t spend, spend, spend. Advertising today would have you believe that everything on the market is​ an absolute must have for you and your family. Credit card companies are approving younger and younger kids every day. Resist the urge to​ splurge. Make saving a​ priority in​ your family, and introduce kids to​ the concept as​ early as​ you can. if​ your child requests a​ big ticket item, put them on an allowance and encourage them to​ save for it. Tell them that if​ they save an agreedupon amount within a​ certain time frame, you’ll match it​ a​ nice little introduction to​ the world of​ the 401k.
Help them as​ adults
Studies show that most grown, independent children ages 25 to​ 34 receive over $14,000 from their parents. No, these aren’t slacker kids still living at​ home. These are independent, educated adults who earn a​ decent income, but who might need a​ little help getting started in​ the world. Giving now can help your kids save on estate tax when you’re gone, and will also have more of​ an immediate impact for them and more satisfaction for you. The IRS will allow a​ gift of​ up to​ $11,000 per year for each child without incurring a​ gift tax, and couples are allowed $22,000. When you do give a​ sizeable gift to​ an adult child, make sure you set the ground rules on it​ before the money exchanges hands. Let them know that the money is​ to​ be specifically used for something like a​ down payment on a​ home, not for a​ new sports car. You want your cash gift to​ help your child become independent, not condition them to​ expect parental gifts for frivolous purchases.
Most importantly, be a​ role model to​ your children when it​ comes to​ finances. Just like everything else, you can preach until you’re blue in​ the face, but if​ they notice you making unsound financial decisions, the more likely they are to​ do the same.

The Generation Gap Passing Sound Financial Practices Down The Family

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