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How to Help Your Children Save Money

How to Help Your Children Save Money

There is one common myth that suggests that poor cannot save because they have very little money left. Basically, they can’t save because they earn even less than they require for spending to fulfill their basic necessities.

Do you think this is correct?

The US is one of the richest countries in the world, yet less than 50% of its population has no or very little retirement savings. If you are one lucky fellow who starts working at the age of 25, by the age of 65, your chances to be wealthy are 1 out of 100, and if you are super-duper lucky, by age 65 you will be among those 63% of people who survive on social security, charity and help from friends and family. You know, the savings of an average 50-year-old come to just over $43,000, and if you are married and over 65, your medical expenses alone will cost you more than $200,000 a year.

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Statistics are not supporting your case here if you are in 20s and living the kind of life where you buy a new smartphone with your credit card every six months, or spending money on getting front row tickets your favorite band. Statistics don’t support you if you are in your 30s or 40s and have kids to raise and family to maintain, while saving for retirement at the same time.

Reasons for this could be that you never learned how to save, or purposefully ignored the plain and simple advice to start saving from an early age and develop the good financial discipline in your life. It’s not about whether you are earning or not but rather how do you actually care for the money you receive from any source. It is all about being responsible enough to take really small baby steps which can really add more value to your life later on.

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You know, if you are a parent, you can be the best teacher for your kids, and if you are living a financially undisciplined life, your kids will be irresponsible with their money too. Rather than reading top 10 tips to develop saving habits, focus on intervening at the early stage of your child’s development and inculcate all the saving habits from early age.

Stanford University developed a rather simple research program to understand as to how intervention can actually help children save and become more averse to risk. This study was conducted in Ghana—a country with one of the lowest saving rates—and it was demonstrated that with a little intervention, children in one of the poorest countries of the world can be taught how to save and become more cautious with spending money.

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Have you ever thought of intervening into your kids’ lives to help them develop good saving habits? Right from today, what you can teach your children how to save? If you can’t come up with the plan, here are simple routines you can introduce in your kid’s life to help him save more and develop better discipline and self-control:

  1. Start saving 50% of the money your kid receives in gifts. There are many banks that offer bank accounts for minors. Find one near you and start shoving your kid’s money into that account.
  2. Set up social games with your children that can encourage savings; i.e. make envelopes for them and ask them to divide some portion of their income into those envelops.
  3. Involve your children while you are making budget for your home expenses. Explicitly engage them on discussions regarding why budgeting is important and it can save them money.
  4. Don’t always buy the stuff your children want; develop their delayed gratification habit.
  5. Encourage your child to start a small business in school or neighbourhood.

Remember, if you are a parent, you can be the single most important influence on the financial future of your kid. The more responsible you are, the better the future will be for your kids. The decision is all yours.

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Adnan Manzoor

Data Analyst & Life Coach

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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