The Generation Gap Passing Sound Financial Practices Down The Family Tree

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.

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