How a Family Budget Leads to Financially Savvy Kids

Ever wondered how you raise your children to be financially responsible and independent? The answer may not be endless lectures and lessons on Google. Children learn from the examples that their parents set. That means that the more you expose your children to information about cash and how you spend, the more they’ll learn from your behavior.

Although it’s tempting to shield your children from complicated things like debts, and budgeting for as long as possible, the truth is that the sooner they start learning, the better off they’ll be in the long term. While 71% of parents say that they are reluctant to discuss finances with their kids, the truth is that ignoring money means that your kids may feel uncomfortable coming to you to ask questions.

Here’s how you can boost your chances of raising financially savvy children.

  1. Make Budgeting a Family Activity

The first and most important way to bring your kids into the financial conversation is to invite them to join you for the monthly budget conversation. You don’t necessarily need to get into the loans and interest rates part of things with them, but you can show them how much money you have coming in each month, and how much you have going out, so that they can see how everything adds up.

Make talking about cash an everyday occurrence for your family and encourage your youngsters to get involved in looking for ways to save money if possible. For instance, show them how paying less for a store-brand box of cereal means that you have money left over to buy them a treat at the end of the month.

  1. Avoid Impulse Spending

We all wish we could give our children everything. Unfortunately, telling your children that you’re going shopping for groceries one day, and then buying them a treat at the counter could mean that they struggle to understand why you can’t do the same every time you go shopping. Impulse spending is fun to begin with, but it’s better to show your children that you need to plan your spending.

For instance, let them know that they can have a candy bar when you’ve finished shopping if together, you can find a way to reduce your bill by around $3. That way, you can take looking for a bargain and make it into a game.

  1. Don’t Reveal Everything Too Fast

While it’s important to give your children plenty of information that they can use to better understand money, try not to overwhelm them with too much data too fast. Your kids don’t need to know that you have different savings accounts for different cash, or that you owe certain money to specific loans. Instead, introduce them to the basic things at first.

For instance, you can tell them how much money you have each week, after you’ve put cash in your savings and paid your debts, then show them how that money gets broken up into bills, money for food, and other expenses.

  1. Show Them Why Credit Cards a Bad Idea

Ideally, you should avoid using credit cads in front of younger children who can’t understand why you can’t simply use the same piece of card to “buy” anything that you want. However, as your kids get a little older, you might decide to teach them how credit cards work, and why it’s important that they don’t use them too often. For instance, show them how much an item costs when you buy it on a credit card, then show them how much it adds up to later when you add the interest payments on.

This is a good introduction to the way that interest works, and it will help your kids to see that sometimes instant gratification isn’t a good idea if it means that they have to give up on other things later.

  1. Help your Kids Learn from your Mistakes

Finally, when your children are old enough to take on some responsibility, give them a weekly or monthly allowance and let them know that they can spend it how they choose. However, if that child decides to spend all of their money straight away on candy, then they decide that they want a game instead, don’t just give them extra cash. Let them know that they’ll have to start saving again the next time they get their allowance.

It may be difficult at first to say no to your children, but it’s important if you want them to start understanding the true value of money. The more you say no to them, the more they’ll understand that they have to be patient to get what they want sometimes.

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How much is Enough When Saving for Retirement?

Wouldn’t we all love a definite answer to this question? The short answer is that there isn’t one – it all depends on your specific financial goals. If you don’t know where to start, then it’s a good idea to speak to a financial advisor. He/she will use his/her expertise to help you draw up a financial plan that is tailored to your needs and match it to the best financial investments available.

However, here is some advice to help you plan for retirement.

Try to save 75% of your final salary

A reputable financial advisor should tell you that for you to live comfortably, it’s best if you aim to have an income that is equivalent to 75% of your salary. This amount is based on adjustments that many people are likely to make as they get older such as increasing health expenses.

However, this ‘rule’ doesn’t account for every individual. It omits to take into account your health, plans or lifestyle expectations. It also doesn’t tell you how much you need to save. Therefore, it’s important to have a comprehensive understanding of your personal financial goals.

You need to put away at least 17% of your salary from age 25

The above statement is based on the assumption that living off 75% of your pre-retirement salary is feasible. However, that amount may not be possible for all young adults.

Nevertheless, it’s a good idea to start becoming disciplined with your money and not spend it recklessly. This will go a long way to ingraining a rational mindset that sets you on the right path.

Remember to account for lifestyle inflation

Should you be lucky enough to receive a salary increase, it’s important to keep a level head and think rationally. The allure of a new car, a bigger house, and other luxuries is tempting, but this instant-gratification mentality, won’t serve you well in the long term.

Instead, contribute the extra money to your retirement savings.

Here are some top tips that will potentially help increase your retirement savings

  1. Prioritize your retirement savings when you get additional income. In the long term, it’s a much better decision to put any additional income towards saving for retirement instead of spending it.  
  1. Possibly, delay retirement so that you can give your investment more time to grow both through your contributions and return on your investment.
  1. Lessen your income requirements by re-thinking your lifestyle priorities and try to implement changes that will allow you to contribute more towards your savings.
  1. Consider supplementing your retirement savings with additional options such as saving in a tax-free investment account or a unit trust, which both give you more flexibility and easier access to your investment.
  1. Consider getting advice from an independent financial advisor if you are uncertain how much you should be saving. He/she will be able to help define your financial objectives and draw up a realistic plan of how to achieve them.

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Five Ways to Make Money From Your Car

Whether you’ve been behind the wheel for years or have just purchased your first car, there’s one thing that most drivers can agree on: getting and staying on the road can be costly. It’s not just the initial car purchase that you need to think about; insurance, car tax, fuel, and regular maintenance costs can all quickly add up each month or year. In fact, for many drivers, expenses can mount up so quickly that they may even consider getting rid of their car and finding an alternative way to get around. But the good news is that there are several things that you can do to help your car pay for itself.

#1. Rent Your Car Out:

Today, there are many car rental schemes that provide a cheaper alternative to renting a car from a big-name brand. If you drive on the weekend but your car tends to be parked up throughout the week, it’s literally just sitting there costing you money for five out of seven days. Instead, it’s a great idea to consider making some of that money back by renting your vehicle out to others, with a potential income of £3,000 a year to be made. Don’t forget to double check with your insurer before renting out your car; you may need to change your policy to avoid it becoming invalid.

#2. Rent Out Your Parking Space:

Perhaps you’re in the opposite situation to the above, where you’re driving your car almost every day of the week. But if you commute to work, that leaves your parking space available for most of the day. Renting out your parking space can be a great way to make some extra income, particularly if you live in or close to a city centre. Busy locations such as cities tend to be congested with very few parking spaces, and if you are able to find somewhere to park it’s usually very expensive. So, it’s no surprise that many drivers are looking into alternative options such as privately rented spaces.

#3. Advertise with Your Car:

Driving around with ads plastered on your car might not be the most aesthetically pleasing of options, but it can certainly help you make some extra cash to pay for your wheels. It is even better if you can find a brand that you love and don’t mind using your car to promote! And, the adverts are usually stickers that can be easily removed from your car once you’re done, making it a very worthwhile option to consider if you are in need of a temporary solution to make some extra money.

#4. Car Share:

If you’re the kind of person who’s always offering people lifts, then why not make some money from it? If you commute to work on your own, then you have empty seats in your car, which could be taken by colleagues or even friendly strangers who are travelling in the same direction as you. You can find several websites or apps that allow you to sign up and offer your services as a lift-giver, and passengers will cover their cost for the ride. Bear in mind that if you’re hoping to make a profit from carpooling, then you’ll need to notify your insurance company and change your policy to ensure that you are still covered in the event of an accident. In addition to the money side of things, car sharing is kinder to the environment and you’ll have a more interesting commute when you’re able to use it to meet new people.

#5. Selling Your Car:

Last but not least, although it might not pay to help you keep your car on the road, making the most money from selling your current vehicle is always best if you want to use the funds to help you upgrade to a new one. There are many reasons why you might be considering selling your current vehicle – perhaps your family is expanding and you need a bigger car, maybe your car is getting old and you’re worried that it won’t be roadworthy for much longer, or perhaps it is time for a change. Either way, there are several options. Selling your car privately will usually make you the most money, although if you have a fairly new car in good condition, it might be worth seeing how much you could make by selling it to a dealership. Older cars that are not going to last much longer will be harder to sell – market them for parts or sell to the Scrap Car Network for some quick cash.

Running a car today can be one of your biggest expenses, but smart drivers can work to ensure that their car is paying for itself. Which of these methods will you try? We’d love to hear from you in the comments.

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