Teaching kids about money and how to handle finances is one of the most rewarding lessons you can give them
One of the best lessons you can give your kids is how to manage their money and personal finances. Even the most basic money management tasks like budgeting, saving and paying bills on time can set someone up for a more financially-secure life.
Today’s essay is by Maria Vila Dupla, a student at San Jose State University in the Marine Science Master’s program. She shares how her parents taught her to handle finances and what she does to keep on track.
Check out Maria’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
Teaching your Kids How to Handle Finances
One of the most valuable things my parents taught me was definitely how to handle my finances. Instead of specifically lecturing me about ways to successfully “survive” economically speaking, they taught me by exposing me to the world of finance early on.
I had an active participation in budgeting and paying bills since I was very young, which made it easier for me to wisely manage my finances as an adult. Among the main tips I kept in mind were to always keep record of every transaction, to avoid missing deadlines by writing them down and to put a percentage of my monthly income into a savings account.
It is not uncommon for banks and other companies to make mistakes and charge customers for a service they did not provide or charge them more than they should. For this reason, and following my parents’ example, I keep record of every transaction I make, whether it is buying a trolley pass with my credit card, writing a check to my landlord or transferring money to another account.
If I notice something unusual when I log into my account, I need proof of my activities in the form of receipts or confirmation emails in order to claim money back. For this reason, it is also extremely important for me to check my account periodically to make sure there are no mistakes.
Stay on top of your debt as well by learning how rank your debt to pay it off faster and save money on interest.
How to Budget and Paying Bills on Time
There is nothing more frustrating than having to pay more money because a deadline has been missed. My parents also felt this way and kept a calendar on our fridge where we marked the days our rent, insurance and phone bills were due, as well as pay days. It’s a good way to handle finances and bills without getting surprised by a missed payment. As a way to avoid having to deal with late fees now that I live on my own, I write everything down on a planner and make sure I pay my bills ahead of time if I am leaving town.
Successful budgeting is perhaps the most challenging aspect of finances for individuals. I have found that it is not easy to decide what to invest your money in and how much to spend or save, especially when you are relatively new in the world of employment.
Putting 15% of monthly income into a savings account, which is only to be used in case of emergency, is a habit that worked out for my parents and I have therefore adopted. In addition to this, I use 10% of my income for personal expenses that include clothes and incidental expenses.
Maria is right on with her saving for an emergency fund but may need to put some money to her long-term financial goals and an investment account. You should have at least three to six months of expenses in an emergency account but can then start investing your money. Check out this resource guide on the eight stock market basics and how to start investing.
The remaining 75% goes towards rent, groceries, gas, etc. This distribution might differ depending on the economic situation of each individual but the take-home message is that everyone needs to have a plan of what they are going to do with their money.
The purpose of all these self-imposed rules is to gain financial security by creating alternative options to prepare for an uncertain future. It is clear to me that prevention is better than cure. According to my parents, the secret lies in strict organization and keeping track of where your money is going down to every penny.
Ways to do this include ordering receipts, keeping a planner with all the information and making a budgeting plan. On the other hand, rather than stressing over making a lot of money in the short term, I find that it is wise to invest money in education to ensure a better future and more benefits in the long term.
I want to thank Maria for her essay on ways she manages her personal finances and how her parents taught her to handle her finances. Be sure to support Maria by sharing the article through social media and check in August for the winner of the personal finance scholarship.