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Helping Kids Learn About Money

Has there ever been a more important time to help our kids learn about money? Record levels of student debt, lack of financial education in schools, unconscious spending through apps and games plus the movement towards a cashless society are all compelling reasons.

Did you know that research has shown many of our values and beliefs around money are formed by the age of 7?
This means that as adults, our money decisions are being heavily influenced by the ideas we picked up as kids, whether helpful, or for many a hindrance.

The Financial Fairy Tales are a fun way to introduce money ideas and tools from an early age. Concepts such as saving, investment, budgets and entrepreneurship are explored though stories set in a fairy tale world.

The Financial Fairy Tales Patreon - helping kids learn about money
The first 3 Financial Fairy Tales stories and Activity Book

We have big plans for 2019 and beyond which includes 3 new story books, more learning activities and an animation series. Above all we want to help more kids around the world grow up with a better understanding of money by providing the skills, tools and beliefs which will empower them now and in the future.

How You Can Help

By becoming a supporter through Patreon, you can help us continue our work in creating these stories and learning activities. Patreon is a website and platform where people just like you can choose to support creative and artistic projects – whilst getting lots of cool benefits for yourself.

Visit the Financial Fairy Tales Patreon page and help us to help more kids learn about money.

Smart Parents Teach Their Kids These 6 Things About Money

One of our main jobs as a parent is to impart enough knowledge and wisdom to our children so they can not only survive in the world but thrive as well. Of course, in modern society, this means educating them on money and finances as well. A topic you can read more about below.

Spending more than you have is always a bad idea.

While our whole society seems to be built on the idea of borrowing money to pay for things that we could not afford to buy outright, educating your kids that spending more than you have on a consistent basis is a bad idea is crucial. This is because if you don’t, not only does it mean that they will get used to a lifestyle that is way beyond their means, but it also sets them on the slippery slope towards unmanageable debt.

Of course, this makes it an essential lesson that you kids need to learn about money. Luckily, it is possible to instill this wisdom in them from an early age by providing them with an allowance, and then encouraging them to save at least a portion of this each month.

Also, you may wish to encourage children to work and save for items they want, as opposed to buying everything for them. The reason being that this can also help them to get into the habit of raising the money before they spend it.  

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Installing a good work ethic in your kids early on can be a game changer.

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The is usually a way out of a financial jam no matter how tight it is.

Another valuable lesson that you need to impart to your kids is that there is nearly always a way out of a financial jam, no matter how serious it is. For example, there are many debt relief agencies out there that can help consolidate debts, something that means it’s much easier to pay them off at a reasonable price each month, which is knowledge that it is essential for your kids to know about, but not plan to rely on.  

Alternatively, there are also loans were someone else vouches for you and promises to cover the debt if you default. This can be hugely helpful if someone is in a financial fix, but their credit is poor. Of course, you will also need to remind your kids to shop around for the best apr guarantor loans and other financial products as well, as some will offer a lower interest rate and other benefits. Something that can make all the difference when it comes to being able to pay them back, and so could help your children have a better quality of life as well as get out of financial trouble if the need arises.

Saving is good, but investing is better.

Parents also need to emphasize the importance of not just saving money, but also investing it as well. In fact, it is hugely important to teach your kids about investing because no other action can allow them to increase their net worth in such a drastic way.

 

Sadly, even now the investment market has become much more accessible to the everyday person because of apps, and low management fees, few people realize the long-term benefits of this activity. Therefore It’s crucial to make your kids not only aware of all the investment options that are available to them including property, cryptocurrency, and futures but also educate them on how these platforms work.

Also don’t forget that as a rule investment is a cumulative process, and that means the sooner your children can begin on this path, the easier their financial future will be. Therefore be sure to explain and emphasizes the value of investing during their mid to late teens so they can get a jump on the competition.

Money doesn’t make you happy, but it can help.

It is also hugely important that as a parent you help your children to understand that money in and of itself isn’t what makes people happy. In fact, it’s the lifestyles, health care, and reduced stress that those with good finances enjoy that is the key.

What this means is that it’s crucial to delineated the quest for becoming rich and yet not spending any of this in ways that enrich life, and doing the opposite. Therefore, be sure to listen to your children’s opinion on what they want to do in their lives, in term of their career, and their goals, as well as who they want to be and adapt your financial education to this.

After all, just recommending that all you kids go into high paying finance positions is a one size fits all solution that is unlikely to work for most people. In fact, at worst it can land your kids in a career that is unfulfiling, even cause them to resent you for pushing them in that direction in the first place.

Monitoring spending is a task that needs to be done regularly.

It’s likely that as a patient you will make an effort to teach your kids that they need to wash up after they have cooked and eaten a meal and that the need to change their socks and underwear each day. However, it can be all too easy to forget to teach them that monitoring what has been spent each day should be a regular task as well.

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In fact, by establishing this as a part of their daily routine, you give your kids the tools to much better monitor what is happening with their finances. This can help them make improved buying decisions, avoiding impulse buys, and stay out of debt. All things that mean this small daily task can have a considerable effect on their financial well-being through the entirety of their life.

Finances don’t have to be confusing.

Lastly, it’s incredibly important that you teach your kids that correctly managing their money and budgeting doesn’t have to be complicated or confusing. In fact, sometimes the simple systems can work much better not only because they are clearer to follow and stick to, but also because they make dealing with financial matters a lot less intimidating. Thus making this final lesson one that is also crucial to impart to your children.

 

The Good, the Bad and the Ugly: Teaching Your Children about Debt and Borrowing Money

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Most people don’t get into debt out of sheer stupidity. Most people get into debt because they have not been educated about money – or more specifically borrowing money. They find themselves in a situation whereby they need money quickly, and they borrow it without fully understanding what they are letting themselves into. There are then those who are enticed by all of these amazing promotional offers, and they sign up to a number of credit cards without considering how this is going to impact their rating. The obvious solution may seem simple: avoid borrowing money altogether. However, if you do this, you won’t have a credit history at all, and this is arguably just as damaging as having a bad credit report. So, we need to educate our children about borrowing money responsibly, the impact of borrowing on their credit report, and what to do if they do find themselves in debt. After all, in some cases, debt is unavoidable.

LESSON ONE: THE VARIOUS WAYS YOU CAN BORROW MONEY

Firstly, you need to make sure your children are aware of the different methods of borrowing money. In general, this can be split into two categories: loans and credit cards. Of course, there are then many different types of loans and credit cards. With regards to the former, you will be given a certain amount of money, which you will then have to pay back to the lender with interest on top. With a credit card, you will have access to a certain amount of money, and you will only be subject to interest if you do not pay the full amount off by a certain day of the month. Credit cards are ideal for those who need access to money to tick them over until they get paid. If you are self-employed, for example, and you don’t know what date of the month your money is going to come in, you can use a credit card to tide you over until then. A loan is more suitable when you are making a large purchase. There are many different types of loans, including bank loans, secured loans, and payday loans. The latter provides a fast loan approval for those in need of money as quickly as possible. However, the APR tends to be very high, so you’ll end up spending a lot of money taking the loan out. A secured loan will be secured against one of your assets, for example, your car or your home. If you default on your payments, the lender can sell your vehicle or your property to cover the payments you have missed. It is important to teach your children about the different factors they need to consider when taking out a loan or applying for a credit card. A lot of people never learn about APR, and so they end up borrowing money without having a full understanding of how much they are paying for it. This is an easy way to get into debt, and it can be avoided with simple education.

LESSON TWO: CREDIT REPORT

The next thing you need to teach your children about is their credit report. Explain that their credit report is something that a lender will view when determining whether to lend them money. This does not only relate to companies who deal with loans and credit cards, but catalogue companies, furniture stores offering financial plans to pay off furniture over the course of a few years, phone contract businesses, and such like. It is, therefore, critical to maintain a good credit score. Unfortunately, a lot of people end up causing damage to their credit report without even realising it. This is why you need to teach your children about the different aspects that do and do not impact a credit score, and the steps they can take to improve their credit score. One thing a lot of people do not realise is that they do not have one set credit score. There are a number of companies that provide credit reports, and most companies and lenders will look at one or several credit reports to gauge whether someone is credible to lend to. People can access their credit reports online, and it is a good idea to do so, so that you can have a general understanding of what your score is, where you are going wrong, and where you are going right.

So, let’s go over the different elements that make up your credit report, and the impact they have:

  • Your personal information – One of the easiest and most effective ways to improve your credit score is to make sure that all of your personal information is up to date. If it isn’t, lenders may struggle to verify who you are, and this can have a negative impact on your rating. Plus, if your personal details aren’t correct, you could miss out on notifications, which could result in you failing to pay a bill, which will, of course, have a bad impact on your credit score.
  • The total balance of your active credit accounts – The total balance of your active credit accounts plays a crucial role in determining your score. If you have a mortgage, this will not be included within the calculations. This includes your credit cards, any purchases you are still paying for, overdraft facilities you are using, and any loans you have taken out. If you owe more than $15,000, this will have a negative impact on your credit score. If you owe more than $30,000, this will decrease your score even further.
  • How much of your available credit you are using – There are a number of factors to consider here. Firstly, your highest credit limit will play a role. If you have a credit card with a limit over $1,000, this will improve your credit rating, as it shows that you are a low risk borrower. However, you also need to think about how much of your available credit you are using. For example, if you are using 95 percent of the credit you have available to you, this is bound to have a negative impact on your score, as it indicates you are relying heavily on credit.
  • Payments – Are you keeping up with your payments? This is the most important factor of them all when it comes to your credit score, as a late or missed payment will stay on your account for roughly six years.
    • The age of your credit accounts – Again, there are a number of factors to take into account here. Firstly, the average age of all of your credit accounts is considered. Having an average age of 33 months or more is considered a positive. Also, the number of new credit accounts you have opened. If you have opened a number of accounts within a three-month period, for example, this will have a negative impact. However, if you have only opened one credit account, this will not have a bad impact on your score.
    • Credit applications – This is where a lot of people have a negative effect on their score without even realising. Many people decide to make numerous credit applications, and then they will accept the best credit card they get approved for. A lot of people also try their luck, applying for cards they are unlucky to get accepted for on the off chance that they will. This will have a negative impact on your score, as credit applications are included in your report. There are soft searches, which don’t impact your score, and hard searches, which do impact your score. The best thing to do is use one of the online services that are available to determine your chances of being accepted. This ensures you only apply for credit cards whereby you have a high chance of approval, so that you don’t need to carry out numerous applications.

LESSON THREE: WHAT TO DO IF YOU GET INTO DEBT

Last but not least, it is important not only to teach our children about avoiding getting into debt, but also about what to do if you do get into debt. The problem can easily get worse and worse when someone does not know how to deal with debt. It can seem like the end of the world, but it doesn’t need to be. In fact, you will find plenty of inspirational stories on the Internet about people that have gotten themselves out of severe debt.

Most people agree that the best way to tackle debt is to pay off the biggest debt first while making the minimum payments on all loans and cards to ensure you are not subject to any further fees. You should also ring up your credit card provider or any other lender you owe money to and see if you can negotiate more favourable terms. It is then a case of examining where you went wrong and how you got into debt in the first place. This will help to ensure you do not make the same mistake again.

 

Healthy Money Attitudes To Teach Your Children

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When it comes to passing on lessons to your children, most people think about manners, temperance and sensibility take priority. Not many of us consider it important to teach a young teenager about money matters in depth, or to begin a structured approach to gifting them a monetary mindset.

While this might seem like overkill from a young age, it can be very helpful for their development. We often keep habits we are taught from a young age. If you were ‘forced’ to make your bed upon waking as a child, it’s likely you’ll keep that habit for the rest of your life.

If you were brought up in a clean and tidy household, you are much more likely to value organization and tidiness in your living area as an adult. By this logic then, teaching our children from a young age about money, making them comfortable with it and feeling responsible for it, can help them make great financial decisions early on.

We’ve collected some fantastic tips to teach your children from a young age, and examples you can use to relay this information in an understandable way.

Money Is Dynamic

The ‘hoard’ mentality can harm someone over cautious with their budgeting. Sometimes purchasing quality over quantity is important, so long as it’s coupled with a sense of temperance and patience. Depending on the age of your child, you might illustrate this by taking them around two separate toy or video game stores.

In order to gain the best video game released that week, suggest they sell two of their older games, or that this will be their only game you buy them for a period of months. Show them that money is dynamic, and it’s okay to spend. But also back that up with foresight, and a budgeting timeline. Demonstrating this with a product they are interested in receiving will teach them the value of financial compromise, despite money being healthily spent.

Every Dollar Has Value

Of course, the value of one dollar is, well, one dollar. However, teaching your children every dollar has value is important. Teaching them every dollar has value could be illustrated by incentivising their chores. If you allow your child to wash your car for $15 every week, consider adding a bonus $5 if they vacuum the internal seats and carpets. This shows them how effort translates into money, and how sometimes it’s worth applying effort to gain more and becoming more secure. One other way to best exemplify this is to teach by osmosis. If you have debts yourself, the child will often figure this out – especially if you’re stressed about it often. Using debtconsolidation.loans and showing them a surface, illustrative only budget to show what percentage of your income is being applied to a singular debt payment, they will see that careful financial planning and always counting the dollars to the minutiae of their accounting prowess has benefit.

With these tips, your child should hopefully be introduced to financial planning, temperance and a healthy attitude to spending. As they move into the world and gain their freedom through work or college, they are much more likely to make sensible purchasing decisions.

Are You Setting A Good Example For Your Kids In How You Handle Debt?

Teaching your children about looking after their finances is something that every parent needs to think about to make sure that they are giving their children the best attitude towards money. But when it comes to teaching our children about the importance of every aspect of finance, including debt, are we, as parents, the best example? The amount of debt that we all tend to have now is mounting, from credit cards to essentials like a mortgage, and so we can all benefit from learning, not just how to speak to your children about debt, but also to set a good example about how we handle financial struggles. So how can you do this?

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Communicating The Effects Of Debt

This is the best place to start, depending on the ages of your children, you may want to sit them down and very simply give them a little bit of handy advice about the effects of debt. You may remember yourself, as a child, seeing your parents discussing bills and the atmosphere getting quite heated, so to avoid these kinds of scenarios, you would be better off speaking about the effects of debt to your children. It can be a difficult line to tread, but many debt advisory companies talk about the impact of things like bankruptcy on families, and they say the best approach is to be open and honest. You never know, they may be more understanding about why you have to do an extra shift at work.

Show Them You Are Taking Positive Steps To Get Out Of Debt

Another way of setting that example is to try and get out of the hole that you dug for yourself. If your children can see that you are making valid attempts to redress the balance, this will teach them a very valuable lesson about money, the fact that you’ve made a financial mistake and are trying to rectify the problem speaks volumes. Not that debt should be something that is okay for your child to get into when they are older, but understanding that there are resources out there to help you get out of financial problems, like various websites such as debtrelief.xyz, and debt consolidation companies. But rather than teach your children the lesson that it’s okay to get into debt because there are things around to help you, it’s more important to teach them proper habits about spending money.

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Practice What You Preach

Setting a good example for any child, regardless of their age, is something you need to think about. Many parents talk the talk, but when it comes down to walking the walk, it never happens. Again, this may be something you remember from your childhood, your parents telling you not to do something but they did it anyway. And while hindsight is a wonderful thing, if you really want to set a good example for your children in how you handle money, you need to make sure that they see you handle money in the right way. From paying bills promptly to being methodical with your finances, these are all things to think about.

Being more methodical with your money will benefit you anyway, so why don’t you start to do this now? With infinite financial resources online and even financial calculators like thecalculatorsite.com, setting an example for your children in how you handle it is an excellent life lesson for them to learn as soon as possible.