Teaching Our Youth How to Optimize Their Finances

Benefits of Being Financially Aware

How important is it to be financially aware? Well, it equips people with an understanding of basic financial concepts and how to utilize them in their real-world situations. In practicing this, you will become better able to manage your money, make sound decisions, and maintain healthy spending and budgeting habits. The importance of financial awareness becomes clear when considering real financial circumstances.

Were you taught about money as a kid? I’m sure the answer to this question, such as many fellow Americans would say, “no”. And that isn’t your fault! Up until recently our public school system didn’t even offer a class in personal financial management and education. And as for our parents, most of them were uneducated on personal finances. Leaving them unable to pass that knowledge down to us. So on and so forth the chain of consumerism continues. But times have changed. And the knowledge is there to be given.

Do you want to help your kid(s) be skilled at managing money in the future? I’m sure the answer to this question is, YES! But I’m sure you are curious about where to even start? How do I as a parent, teach my child about managing their finances? A University of Cambridge study showed that kids “learn” money habits as early as age 7! That means that your kids are watching YOU! And like anytime you notice they pick up a bad habit or saying around the house – you realize that came from me. Now with that same concept in mind, replace the bad habit with money.They are watching you and learning from you whether you are teaching them intentionally or not. So in other-words lead them by leading a healthy example.

5 Simple Ways To Save & Build Financial Security

1. Make a budget – By creating a budget you will be able to see where your money is going each month and allocate funds for saving, bills and fun.

2. Save – A little money? A little investment. Ideally, you would want to save 1/3 rd of your income if you are able! However, refer to your budget for what is do-able for you!

3. Pay Off Debts & Avoid New Debt – Becoming debt-free puts you in complete control of your money.Plus! It looks great when you are ready to step into your third phase of life -adulthood.

4. Have A Safety Net – Not having a safety net puts you at risk for derailing your long-term financial goals because of an unexpected event such as illness or other un-for-seen circumstances.

5. Keep Cash Out For Budgets – Pulling out and setting aside cash for your expenses is helpful for several reasons. Creating envelopes labeled ex: “Rent”, “Lights”, “Car”, “Movies”, “School” etc, and allocating money in each one from your paychecks. This lines up with #1.

Why Is Saving Money Now So Important Later?

Saving money is important for many reasons, but to name a few here is our Top 6!

1. Building your emergency fund – Having a nest to fall back on during unexpected times is essential during times of hardship.

2. Save for retirement – A long way away – we know. But ONE DAY you will be needing that retirement fund. Think for the future. Build for the future.

3. A down payment on a home – One day, you will need to buy a home. Saving now will alleviate the financial tension in the future for a purchase such as this.

4. Vacations, Cars, & other large purchases – Who doesn’t love going on a fun vacation with friends, buying a new ride, or just doing something new? It’s easy to spend money you don’t have on things you enjoy. That’s when saving money FOR this, becomes helpful.

5. Recurring Expenses – Saving for recurring bills is very important. It ensures that you have the funds available when you need them.

6. College education or materials – Don’t graduate with a degree, AND debt. Prepare now so you don’t have to worry later.The Financial Statistics Take a look at just a few of the statistics provided on how money, debt, and credit cards have an impact on our consumers within the economy:

● 78% of Americans live paycheck to paycheck.

● Student loan debt is $1.5 Trillion for more than 44 million borrowers.

● Credit card debt is up to a record $1.04 Trillion.

● 21% of Americans aren’t setting aside any money for short-term or long-term goals.

● Over 40% of Americans have less than $10,000 saved for when they retire.

● 56% of millennials don’t have any money saved in a retirement account. Only 39% of baby boomers have money saved in their retirement accounts.

● A recent poll found only about 1/3 of Americans (32%) maintain a household budget knowing these numbers becomes especially important when we start to teach our children about financial security. But, why is that? These are the real numbers, these statistics reflect the financial habits of a majority of the American population. Where do you think they learned these habits from? Do you think that these fellow American’s were taught about finances in their youth?

The numbers sadly don’t reflect that they were. But those numbers can change, one child at a time. And that’s where the importance of knowing how to manage money from our start becomes vital.Credit Card Debt – Real Numbers. Real Talk As parents we probably know more about the dangers of credit cards with this being our method of casual spending and large purchases. With our world turning into a digital society, with higher costs of living, and low wages many of our youth have turned to credit cards to avoid debt, when they are incurring it. Check out these statistics on the average credit card debt for each age group and see the importance and impact of the digital dollar.

● Generation Z: $2,047 average credit card debt

● Generation Y: $4,315 average credit card debt

● Generation X: $7,750 average credit card debt

● Baby Boomers: $7,550 average credit card debt

● Silent Generation: $4,613 average credit card debt

These numbers show you just how important it is to teach our children about the value of the American dollar. Visually, credit cards do not give a representation of available funds to our children. But when we pull out a $100 bill from our wallets, and as we spend it in front of them, they can see the money being spent. That is them learning about the consequences of spending money, seeing visually what happens vs swiping a card. Here is a great example; I started with $100, and spent $60 at the grocery store, your children now see that you have $40in cash left. That remaining $40 is in 2 – $10’s, 3 – $5’s, and 5 – $1’s. The available remaining funds are clear, and able to be seen in front of them. Creating a clear visual representation of your spending. But let’s say you don’t have the $100 in cash pulled, and instead opt to use your debit/credit card. The children see you swiping the card, but do not see the impact on the amount. So, the funds seem limitless.Again, we miss the opportunity to teach our kids about money management when we miss opportunities to teach them such as this.What Does This All Mean For Me and My Family?It means that YOU can give your children the knowledge of sustainability in the world of finances and be successful when doing so! See the rest of what BUCK Academy has to offer you and the future health of your children’s finances! Reach out to us today – flourish tomorrow.

“Value Knowledge. Gift It Forward.”