Teach Your Children Financial Responsibility
It's nice to believe that once your children have completed their education, your parenting duties are mostly behind you. But your financial support often extends beyond graduation.
One way to minimize that stress is to teach your recent college graduates some important lessons about money. You can help them get off to a good start on their new lives, and reduce the odds that they'll need to lean on you for their finances. These three strategies are a good place to start:
- Take advantage of compounding: Time can be a young person's greatest financial asset. Even small amounts invested in your 20s can have a big impact on the size of your nest egg at retirement. Urge your kids to start saving as soon as they land their first jobs.
- Avoid debt: When you're young, money is often scarce, and needs seem plenty. But going deep into debt to furnish that first apartment or buy a new car means paying interest to the bank instead of investing in yourself and your future.
- Budget: Budgeting is more than plugging numbers into a spreadsheet: It's a system for tracking how much money comes in and where it goes. A budget, especially with savings and investment categories, helps you live within your means by showing you in black and white what you can afford to spend each month, and where you might find savings. Learning to budget early can help your new grads become self-sufficient sooner.
Neither State Farm nor its agents provide tax or legal advice.