3 Vital Money Lessons to Teach Your Kids
Single mothers have to learn a variety of important lessons in order to achieve financial freedom, and you can make life easier on your children by helping them develop good habits from a young age. Kids who are introduced to personal finance early generally find it easier to manage their own money later in life.
This article will cover some of the most critical financial lessons you can teach your child. Make an effort to have regular conversations about money so that they understand the impact a healthy financial mindset will have on their life.
Credit Card Debt Is Bad
Consumer debt has been essentially normalized in the United States, and many people don’t see a problem with credit cards, student loans, or other forms of credit. While going into debt is sometimes the best choice, it’s important for people of all ages to understand the risks involved.
Credit cards, for example, typically come with interest rates of up to or even over 20 percent. Paying back a large credit card debt can be extremely difficult since the balance will continue to accumulate interest over time. It’s generally much better to avoid debt in the first place than to try to pay it back later.
Tip: Start an Emergency Fund
We often feel like debts are unavoidable in unpredictable circumstances, but you can prepare for these situations by contributing to an emergency fund. Your child should understand the importance of consistently saving money and having some cash to fall back on in a worst-case scenario.
Without an emergency fund, people can be forced into debt to pay for unexpected costs. While you can help your child by starting a savings account for them, it’s much more important for them to develop the habit of saving on their own and taking a more proactive approach to personal finance.
Consider Early Retirement
You probably don’t spend much time thinking about your child’s retirement, but it’s never too early to start considering their financial future. Putting off saving for retirement is one of the most common mistakes in personal finance, and it’s difficult to make up for lost time if you don’t start making contributions from a young age.
In contrast, putting extra money away for retirement is a great habit that will help your child reach his or her long-term financial goals. Twenty, for example, might seem too early to begin saving for retirement, but even just a few hundred dollars each year will make a significant difference over time.
Tip: Set up a Roth IRA
Most people assume that 18 is the youngest age at which people can contribute to an Individual Retirement Account, or IRA, but there’s actually no minimum age associated with these accounts. People of all ages can make and contribute to an IRA as long as they have at least some earned income.
While standard IRAs allow you to make contributions with pre-tax income, the money you put in a Roth IRA is not tax-deductible. On the other hand, contributions grow tax-free and aren’t subject to taxation when withdrawn during retirement.
Roth IRAs come with relatively low contribution limits—$6,000 in 2019 and 2020, for example—so you miss out on the tax advantages whenever you fail to make the maximum contribution. In contrast to some other retirement accounts, Roth IRA funds can be withdrawn at any time with no penalty.
In addition to the tax benefits associated with Roth IRAs, the money you contribute will typically grow much more quickly than in a conventional or high-yield savings account. Investment accounts carry more risk than accounts with fixed rates, but short-term fluctuations are generally outweighed by growth over time—especially when investing for a long-term goal like retirement.
The Importance of Budgeting
Many people avoid thinking about their finances because they’re worried about what they’ll find, and financial anxiety is one of the biggest obstacles toward developing a better money mindset. Simply reviewing your statements and understanding where your money is going is arguably the most important step in improving your approach to personal finance.
Without a clear budget, it’s easy to lose track of how you spend your money and end up consistently falling short of your personal and financial goals. You won’t even know what kinds of spending to cut back on if you’re interested in saving more money.
Tip: Start Budgeting Early
Rather than shifting to a budget later on, your children should understand the importance of a budget from a younger age. That way, they won’t have to adjust their financial habits to start working toward long-term financial goals like college and retirement.
Getting started with budgeting can be complicated, but there are more resources than ever before to help novices learn more about creating a budget. While there’s nothing wrong with budgeting in a notebook, your child may adjust more quickly using a website or mobile app.
Most kids aren’t as excited to save as they are to spend, but you should teach good habits by putting some of their allowance away. It’s important for children to see saving as a financial priority rather than something to do with any money that’s left over—people who think of saving as optional often have more trouble sticking to their targets.
Everyone has their own experience with personal finance, but you can get your children off to a good start by teaching them about money from a young age. These are just a few of the most important topics to cover as your child begins to learn more about personal finance.
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Single Momma’s Guide to Raising Money-Savvy Kids
Single Momma’s Guide to Raising Money-Savvy Kids
As parents, there are plenty of lessons we need to impart to our children – like learning how to say “please” and “thank you”, apologizing when you hurt someone, and the importance of flossing. But for some parents, there’s one more valuable lesson they often neglect to teach their children about: managing money.
It’s never easy to talk about money–especially to kids. But sheltering your children from the grown-up realities of money will not help them make sound financial decisions in the future. This could put their financial wellness, and even yours, at risk.
So how can you avoid such fate? Pass on good financial habits to your children! Try these tips to raise money-savvy kids.
Start the Money Conversation Early
422737 / Pixabay
Some parents are often reluctant to talk to their kids about money, often entirely avoiding the subject as much as possible. But this could do more harm than good. Children who grow up without a clear understanding of the value of money and how to use it may experience financial troubles in the future. That’s why it’s vital to be open about the subject as early as possible. And you can start by simply answering your kids’ questions.
You may be surprised at what they already know and the concepts you think they know but actually are still unfamiliar with.
Give your child an allowance
stevepb / Pixabay
Sometimes the best way for kids to learn about money is by letting them handle it themselves. You can do this by giving an allowance that corresponds to your child’s age. You can also choose to give them money in exchange for doing household chores, such as washing the dishes, cleaning their rooms, or contributing to other family duties. This is a great way to teach kids that money doesn’t simply pop out of nowhere, but is earned.
Let your kids make mistakes
ikon / Pixabay
As your kids receive their allowance, give them full control over how they use their money. If he or she chooses to spend the entire allowance on one day, let your child be. The goal here is to let your child make mistakes and learn from them. Kids will learn a lot from the decisions they make, instead of being constantly lectured or reprimanded by parents.
Set a good example
Unsplash / Pixabay
Even if you’ve had hours-long conversations about money management with your kids, your efforts are still bound to fail miserably if your children don’t see you practice what you preach. So it’s important that you set a good example.
For example, if you’re explaining the importance of saving to your children, make sure that you have a rainy day fund to show for it. Or if you want your kids to be smarter about their spending, share your past spending mistakes and the consequences and lessons you gained from them. Use every opportunity to be a good role model to your kids and demonstrate the benefits of becoming money-savvy.
Remember, financially confident kids turn out to be financially responsible adults. So make sure to keep these tips in mind to help your children enjoy healthy financial futures.
Author Bio:
Mari writes for Loansolutions to help educate people in making informed-decisions on taking out loans and becoming responsible borrowers. Being the COO, she feels it is her social responsibility to do so. Learn more from her as she shares tips, advises and stories on finance. Also, she’s fond of 9GAG, so you might read some random stuff over here.
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13 Powerful Money Lessons Every Single Mom Must Learn
Introduction
This little guide is an introduction to the 13 money lessons that will bring you peace, prosperity, and a brand new outlook on money. I have learned these lessons my life as a single mom. Being financially responsible for my children basically forced me to learn these lessons because I did not want to be a welfare mom statistic.
The tips in this booklet range from ways to control your financial life to a plethora of savings strategies for your big and small dreams.
Managing money as a single mom (or anyone) can be challenging when the income source is deficient. The secrets discussed here will show you how to use what you have, heal from your disappointments, and learn how to magnetize more money.
Let’s dive in!
1. Controlled Spending = More Freedom
To turbo charge your financial life begin by developing a spending plan to avoid overspending. If the word budget conjures up feelings of restriction and lack; call it a spending plan.
Understand that when you develop a spending plan you feel more in control and it’s easier to stop overspending.
The first thing to do is think about and list everything you need, and then assign a dollar amount to each item.
Review your past spending trends to get an accurate look of how much you spend for bills, food, clothing, car/ transportation, and entertainment.
Review your bank account online for a ready source for seeing where your money goes.
2. Give a Kid a Dime He’s Happy for a Day Teach Him About a Dollar He’s Set for Life (Kids & Money)
Teach your kids how to create and maintain a budget. Because the older they get the more money they will want.
Kids should know how the money is spent so that they can be more sensitive to money limitations.
When kids know approximately how much money is coming in and how much has to go out to maintain a life they will be more sensitive to your role as provider.
Knowledge about financial obligations might encourage kids to find ways to earn money on their own.
3. Hedge off Disaster or Head to Vacation (Rainy Day Funds)
Have a savings plan to prepare for emergencies? It is hard to predict when an emergency will happen that requires a large chunk of cash.
Putting away money for a rainy day is very empowering (I’m speaking to myself here).
If you have money saved, that is specifically for these times, your stress level will go way down.
A stash of cash can relieve feelings of desperation and resorting to uncharacteristic behaviors.
Most financial gurus recommend that you have $1k-3k in savings. If you can manage to save at least $500 that is better than nothing.
Open up a separate account for your rainy day fund. Use your tax refund, raises, or other windfalls of cash to fund this account.
4. Get Smart About Child Support
Get child support payments direct deposited if possible. There is nothing worse than waiting for a check to arrive in the mail from your ex.
If you are getting support through the state, you should have the direct deposit option.
If you have an agreement with your ex, insist on having the funds automatically transferred to your account. The money will be taken out automatically so you won’t have to worry about getting the funds on time.
If you are not getting child support, please find a way to get it. For more information, read the e-book, Stop Whining and Start Winning Child Support.
5. Keep More of Your Money in Banking Transactions
Join a Credit Union to avoid outrageous bank fees. Your money will earn interest over time.
If you are eligible to join, you can easily become a member by completing a membership application, depositing and maintaining the minimum par value of a share (generally ranging from $5 to $25), and paying a one-time membership fee if the credit union charges such a fee.
As a member, you will have the right to vote at the credit union’s annual membership meeting for the credit union’s board of directors and its other officials. All of the officials are comprised of members, like yourself, from its field of membership. (MyCreditUnion.gov)
Banks are notorious for nickel and diming people to death. There is a fee for everything from checks to account balances below a certain amount. A credit union may be available through your employer, your state, or your school. Find a credit union near you.
An alternative is an insurance-run financial institution like USAA or PenFed. These types of banks
6. Knowledge is Power for Purchases (Research, Research)
Research products or services online for quality and price before purchasing. Before you go out and buy a product or hire someone to do a job for you please, please check online.
When you research prices and quality of service you can same much time, effort and possible frustration.
Places to go online are Google, Amazon.com, ePinions, Znet.com, Cnet.com, Consumer Reports, and a few others.
Get the inside scoop on the quality of a product and can get a good idea about how much it will cost. You can never go wrong with good research.
7. The Art of Making Extra Money from Your Expertise
You can find a way to make extra money from your skills and talents. I talk about this on my blog and now I am talking about it again.
Have multiple streams of income; it is almost a sin if you don’t.
Your extra income doesn’t have to be consistent at first but enough to give you extra money for the special thing you want to do or have.
Do something you are passionate about or just be able to see what people need/want and fill it.
Check out Rich Single Momma for side hustle ideas.
Take a class on starting a business through the local Chamber of Commerce or SCORE. You don’t have to have an MBA to run a business but you can take a class.
8. Master Your Mindset About Money as You Think So Your Will Money Be
Change your thinking about money. For many people, especially single moms, money has many negative connotations. You don’t have it, there is not enough of it, and you don’t know where the next batch is coming from. We have a tendency to think that it is out of reach so we struggle with it.
Money is simply a tool to get the things we need and want. Of course not having it and thinking about your lack will not make it come to you any faster.
When you change your thinking about money, see its true purpose, and realize it’s abundance, you will have more of it.
Remember that there is more money available for you. Whenever I have to pay a bill, write a check, or spend money I keep that thought in mind. I will have more, not because I am doing anything special but because I just know that it will come again.
Let the money go to receive more. Think of it as a Money Cycle. Sometimes we get so caught up in holding on to money with such tight fists that we fail to realize that, “a closed hand cannot receive more”.
9. Creative Ways to Get Anything You Want with Little to No Money
When you look around the world it seems like everything requires money, but I want to share a little secret with you. It doesn’t.
There are ways to get anything you want out of life with little to no money. All it takes a bit of outside the box thinking and a little creativity. Read on to find out how to get more out of life with less money.
Discover other ways to get what you really want (money may not be the bottom line). With money constantly on the brain we forget that it is not what we really want.
The true needs are:
- A roof over our heads
- food to eat
- clothes to wear
- a problem solved
If you can look past money and see the true need or want, it’s easier to release the tension and negative thoughts about money and your situation.
Open your creative eyes and you find ways to get what you need without being burdened by the “not enough money” syndrome.
Bartering with Family/Friends
Barter with others including moms, small businesses, your health providers, etc.
Bartering was the first form of exchanging goods for services.
The basic idea is to give something to get something. You may have something that others need or want. It may be a product, service, or personal item.
Others may have what you want so you come to an agreement to exchange things or time instead of money.
The barter system is a temporary way to get what you need when money is flowing in slower than you want.
Join a Barter Club
There are bartering clubs all over the world. I belong to a club called TradeBank, and organized bartering club. I get what I need from members of the club using trade dollars. The value of a trade dollar is just like a real dollar.
You earn trade dollars by performing a service or delivering a product. Your trade account grows and give you more trade power. You can get medical, dental, contractor, retail, and other services. The Tradebank network is currently in cities across the US.
Here is a list of other barter clubs:
Join or Organize a Swap Meet/ Trade/ Exchange Group
Look for local swap meets with a regular schedule. You can connect with other women who have clothes, shoes, kids’ items, baby equipment, etc. that they want to swap with you. If you do not find one in your area you can start your own with ladies in your neighborhood, church, or community center. You can find out about swap meets on Facebook, Craigslist, and other community newspaper or classified ad sites.
Check out Freecycle Groups
People are always giving away free stuff in these groups. They’d rather give away stuff they don’t need to people who can really use it and appreciate it. There are hundreds around the country so you should be able to find one in your area. I’ve seen (and given away) furniture, equipment, clothing, and so much more. Here is the Freecycle link to check it out and find one in your city.
10. Truth About Being Need-y vs. Want-y
Learn to separate your wants and needs
Sometimes it is hard to separate our needs from our wants. Air, water, food, and shelter are really the only things we need to survive. Okay we need clothes too, but the basics are few. The rest of the stuff is optional.
Plan your purchases
- When you see that you need (or want) a new thing it is very important to plan the purchase.
- Write down what you need/want, do the research, save the money, and then make the purchase.
- Make the wanted item a reward for doing certain challenging tasks that you may be procrastinating about.
11. The Giving and Gratitude Cycle is Huge for Prosperity
Your attitude about money plays a big role in how prosperous you become (and remain).
There is a saying, “the more you give, the more you get”. I’d like to add my own twist to it; “the attitude of your giving determines the altitude of your getting”.
The more grateful or thankful about the money in your life the more you will get. The more grateful for the things you have in your life the more you have. The more grateful for the people who help you the more people want to help you.
The same goes with the way you give. Give more (with gratitude) and you get more.
The interesting thing is you will rarely receive from the same place you gave. In other words, you will most likely not get anything from the homeless man on the street or the person you give a bag of clothes. You will get from a completely different source and often you will get back double what you gave.
Here are a few ways to practice giving with gratitude to increase your prosperity:
- Pay your bills with a grateful heart. The services you receive in exchange for your money are essential for living.
- Be grateful because you have the benefit of using the services provided by the city, phone company, car finance company, and on and on.
- Allow the changed perspective to change your attitude about paying bills. You could be in a homeless shelter, unemployed, or living with your parents
- Lights, water, a car, gasoline, food, and many other necessary services are reasons to be grateful. Paying the bills is a blessing so pay with a happy heart!
12. Get Obsessive-Compulsive About Saving
Get creative with your savings techniques. Piggy bank, change jar, online interest bearing account, PayPal, or mattresses. All of these items and location are places to save your money.
Where Will You Save?
It really isn’t about where you save it but how you save it. Here are a few ideas to get your saving juices flowing:
- Savings can come out in addition to tithe or other charitable donations.
- Savings may come out before taxes on the payroll into a 401K account.
- Still others save all their loose change and deposit it when it overflows the container they are using.
The key to the savings method you decide to use, is to be consistent.
Saving $5 or $10 per pay period or per month is better than saving nothing at all.
Keeping it safe from your prying hands may be a challenge but when you commit to saving, and you have a purpose behind it, you will leave it alone.
The Big Savings “Why”
Decide why you are saving your money, find a picture to keep prominently on your bathroom mirror, and start saving.
Tape a picture to the fridge, go to online and look at the features, and plan how you are going to use item you want.
Save or invest your windfall (tax returns, student loan refunds, stimulus checks, monetary gifts).
Windfall Savings Method
The tax season is prime time for a money windfall especially for single moms. The child tax credit and earned income credit is the reason we get a fat tax refund.
Commit to saving at least half of your refund. Use the other half to pay down debt or may annual purchases such as car registration, insurance, or other yearly expense.
Save all, some, most of your tax refund for your rainy day fund, vacation fund, or the kids need braces fund.
When you get that stimulus check put that in the pot too, along with your student loan refund, and that birthday gift money.
If you play the lottery, put your winnings in there too! 😉
13. Embrace True Independence and Make Awesome Financial Decisions
Too often we are focused on the loneliness of single motherhood so we can’t see the blessing it is to be independent. If you can see past the negative you will discover that your independence is a ticket to an amazing financial life. Change your mindset so you can change your life. Here are seven perspective shifts you can make to embrace your financial independence:
- Relish the thought of not having to answer to anyone for your financial decisions. As a single mom you have such autonomy.
- Every purchase you make for the benefit of you and your kids is worry free.
- To save or spend; get in debt or get out of debt is all up to you.
- There is no one to question you or blame you if there is no money in the bank and you don’t have to fight with anyone about balancing the checkbook or taking money out without letting you know.
- Money is one of the major reasons for divorce so there is something to be said about separate accounts and a house account.
- Resolve any money issue you have and get settled before embarking on a new relationship.
- Just promise me that you will check out his financial history and habits first before committing to a long-term relationship or marriage with him.
Now that you know these 13 powerful money lessons, pass them on to your kids so they will have the best financial start in life. You are their best teacher not because of what you say but because of what you do.
Which of these lessons will you apply to your life first?
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7 Ways to Manage Finances Through Unemployment
Sometimes I get questions that I just have to share with you. My answers will benefit others because so many people face the same situation. I was asked how a mom who is unemployed can manage her finances. Here are my answers, 7 Ways to Manage Finances Through Unemployment, in interview style format.
1. If you lose your job abruptly, what’s the first thing you should do in regard to your finances and debts?
Review your expenses and cut/reduce costs beyond the basic necessities. Next contact your creditors and tell them the situation and request a modification or reduction in payments. If it was a layoff go file for unemployment immediately.
2. If you’ve got good credit and want to keep that score high, how can you manage to pay the bills on time if you don’t have any money coming in?
Contact the creditor and make arrangements to reduce the payments, delay the payments for a couple of months, or stop using the cards until you are back on your feet.
3. What type of help can a personal banker offer someone who is unemployed and needs to reduce their monthly expenses?
They can request help with creating a budget from the banker. They can also request a reduction in their personal loan interest rates or that their payment be tacked on to the end of the payment thereby giving them a buffer for a few months.
4. If you have a retirement account, is it wise to dip into it at this time? If so, what’s the best way to go about it?
Getting money out of your retirement account is not conventionally recommended unless it is in case of an emergency. If you must take money out you can take out a portion and roll the rest over into an IRA account. All the money doesn’t have to be used unless the situation is dire but if at all possible leave 10-20% of it in an IRA account.
5. What’s the best thing to do in a scenario in which you’ve been unemployed for awhile, lived off your savings, and now those savings are dwindlng?
Find a part-time position ASAP, sell what you can, and/or start a service business like cleaning, virtual assistance, painting, etc.
6. Are there any tactics people can use, such as negotiating with credit cards, the IRS (if they still owe taxes) and their mortgage company in times of unemployment? Is there such a thing as deferring payment on certain bills until you get back on your feet?
The best tactic is to be honest and direct about the situation. The reality is everyone, even the IRS knows someone who has been affected by unemployment. Tell the truth and tell them you are willing to work out a plan during this phase of your life. Payment deferment will vary depending on the company. The reality is most companies just want to get paid so something is better than nothing.
7. What is the best way to reduce monthly expenses?
Reduce monthly expenses by eliminating non-critical expenses. This may include cable, subscription services, daily coffee runs, shopping sprees, etc. Stop using the credit cards you have and contact the creditor to amend the payment plan. Do your own hair instead of visiting the beauty salon/barber, make holiday gifts and cards, create and stick with a shopping list. Buy value items instead of brand name. Compare prices. Make it a game and know the situation is temporary.
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