One of the many essential aspects of parenting is financial stability. I have no doubt that you will be able to teach your children manners, positive values, and healthy eating habits. But can children be taught about financial security? Do you really have any advice for them regarding money?
I had the opportunity to speak with Mike Zisa recently. He currently teaches at Pennsbury High School in Bucks County and works as a financial consultant. The Early Benefactor: "How Teens and Young Adults Will Become Wealthy" is Zisa's first book. We discussed the children in our neighborhood and the rarity of high school financial education. Lisa discussed the most crucial points that each secondary school student should remember when receiving their diploma.
1. Saving money is distinct from spending it.
Saving entails putting money into bank accounts, whether in the form of cash, checks, or deposits. Cash deposits and short-term certificates of deposit may also be included (Certificate of Deposits). By financial planning, you might actually bring in your cash very protected and simple to get to. Through investing, assets such as shares, real estate, and other investments that are anticipated to appreciate over time are acquired using cash. The best thing you did in your career was invest your money.
2. Utilize the potential of compound interest.
Compounding is the process by which dividend and savings income generate additional income. To put it another way, aggregation is the process by which money becomes income. Compounding can greatly increase wealth! When you are younger, there are more opportunities for collaboration.
3. Start investing early.
Zisa is emphatic to the hilt at this point. As a direct result of this, he wrote his book. If you start investing too soon, you won't be able to benefit from compounding to build cash in the long run as quickly. Consider this: If you start spending $3,000 annually when you are 25 years old, you will have approximately $680,000 by the time you are 65, and the average annual growth rate is 6%. Indeed, even at 35 years old, you are valued at $260,000. The most significant factor in the long-term growth of wealth is time. Invest immediately.
4. If you can't afford something, don't buy it.
Things are wanted and needed in today's world. Money wastage is not a bad thing; Nevertheless, there is a drawback to not using it. Your spending doesn't add to the aggregation of obligation, which will at last prompt monetary ruin.
5. Be cautious when using credit cards.
Credit cards are likely to have a significant impact on your financial situation. Furthermore, Mastercards might be a reason for monetary difficulty. Many people have purchased frivolous and unnecessary items with credit cards in order to avoid significant debt. Understanding that using a credit card involves borrowing money that must be repaid is essential. Regarding credit cards, here are a few important things to keep in mind:
- By the due date, cover the remaining cash;
- In the event that you don't pay the whole sum, you charge absurd financing costs;
- When making a purchase, you should never use a credit card unless you have the money to pay for it;
- Keep an eye out for introductory interest rates and promotions that are balanced;
- Scan the credit card's print, which is the small image you don't want to read..
6. Prioritize real estate investments over debt.
Buy things that help you make money, not things that make you feel like you have to do something! By investing in a stock that pays a dividend every quarter, which is a percentage of the company's revenues, you can get money for doing nothing. In the event that you get a home loan, you'll need to pay the interest like clockwork. This is the meaning of the term "passive profits." However, if you take out any kind of loan, you will already be in debt and have to pay it back with interest. Typically, credits like a home loan may be necessary to purchase a first car or house. Then again, different sorts of obligation make your obligations more costly and make it harder to bring in cash.
7. Make a budget to save money for emergencies.
A budget is nothing more than a monthly forecast of anticipated revenue and expenditures for a specific time period. By making a schedule, you can keep track of how much you spend on various goods and services. An essential component of a budget is the creation of an emergency fund—a cash account—on a monthly basis. The term "emergency fund" refers to funds that are set aside for the costs of an unexpected event. Ideally, you should have three to a half year of regular costs in the hidden gold mine. An unreliable and easy-to-access asset, such as a certificate of deposit (CD), a bank account, or simply a savings account, should be held in the emergency fund.
Zisa correctly infers that the path to financial security begins early. Similar to how they teach their children other aspects of parenting, parents should teach their children how to be financially savvy. You will save yourself and your family if you live beyond your means and develop the habits necessary for a life that is less stressful and more fulfilling.