Sadly, those in the age bracket of 18-24 are the fastest growing age group seen filing for bankruptcy.
Young adults who have been sheltered from the responsibility of earning and understanding money often make enormous mistakes when it comes to money management. Free from their parents’ grasp, whether they step off to college or try something else, they are many times overwhelmed by the monetary obligations expected (rent, utilities, food) after years of not having to pay for items. In addition, they are glassy-eyed over the money coming in the bank from newly found jobs.
Unless a child learns to budget early on, the chances for a financial disaster are large.
Anton Simunovic, founder of Three Jars, shared several tips for teaching children about financial responsibility.
- Empower Your Children. Teach them how to use real money. Says Anton, “Truth is, when the kids spend their money and not ours, they get thoughtful – and fast.” In addition, he mentions that if mistakes with money are going to be made, shouldn’t it be done when the amounts of the money and the consequences are low? Once children move out of the home, teaching them financial responsibility is difficult, if not impossible. Staring when children are young offers parents an opportune amount of time for teaching about money.
- Balance the money. Keep three jars for children – one for savings, one for spending, and one for sharing. Allocate it this way: 50% into the save jar, 40% to the spend jar and 10% to share.
- Be consistent. Giving an allowance is key to teaching proper money management skills, so Simunovic says to give it the attention it deserves.
I will follow through with additional tips on teaching money management to our children, including how much to give and whether or not to tie it into the chore sheet, in a later post.