As parents, your primary concern should be helping your child secure his/her future. Financial talk may be a tough sell considering how young they are at this point. They’re likely more concerned about whatever kids are up to these days.
However, there’s no better time to instill fiscal responsibility than now. Because before you know it, these kids will be off to college and working jobs soon after. The more they know now, the better off they’ll be when that time comes.
Here are a few things they need to know while they’re still young to build a sturdy financial foundation.
Maximizing a 401K plan
You need to let your kids know how to maximize their 401K. As you may very well be aware, this topic can get complicated real fast. But having a good grasp of what it is and what it can do will help your kids long-term.
One of the most important things to note is that there’s free money in 401Ks. To quote The Balance, “When you save some of your paychecks by putting money into your 401(k), your company may also match a certain percentage of your contributions. But if you fail to contribute to your 401(k) plan, then your company match goes away potentially leaving a significant amount of money on the table.”
Getting lower interest rates
By the time your kid goes off to college, he’ll be introduced to student loans. And before you know it, he’ll be paying for a mortgage, car loans, credit cards, and even personal loans. Knowing how to get lower interest rates will surely come in handy.
Work with your kid to find the best low-interest private student loans. There are sites that lets you compare loan rates with just the basic information provided. With reports of student loan interest rates taking a leap, now’s a good time to let your kid know what he’ll be up against.
Set aside money for emergencies
CNBC reports that about 40% of Americans would be unable to cover emergency expenses upwards of $400. Even more alarming, 25% of them have no retirement savings or pension at all. Don’t let your kid be part of this statistic. Teach him how to save money for emergencies.
Set up a dedicated account for savings and automate transfers if possible. This forces your kid to contribute funds for any looming disaster. Most importantly, tell your kid to never stop contributing. Make it a first priority.
Luckily, millennials are naturally frugal. They’re used to living on a budget. To quote a Forbes article, “Many millennials have taken to living frugally with the aim of stretching their paychecks. This helps them spend money on things they want and put a little aside for their futures.”
Cutting monthly luxuries
Streaming services, gaming, and apps. These are just some things millennials are spending their money on. But are they worth it? Consider cutting back on these avoidable expenses. Or if that’s not something your kid can even consider, then maybe cut back a little. Instead, find something worth investing in.