Saving Money in West Bloomfield: Wealth Building Tips to Teach Your Children

Wealth Building Tips to Live by in West Bloomfield

Parents are learning the hard way that they should have taught their children to be more responsible with their money. Unfortunately, many are compromising their retirement savings to help their children make ends meet or to put grand children through college. Here are some tips to avoid being forced to support your children through their adult years and then to support your grand children too!

Children in West Bloomfield Start Learning to Save at a Young Age

It’s never too early to begin saving for a down payment on a home or for retirement. Children are impressionable; they look up to their parents and want to please them, to a point. Begin teaching your children to save their money very early in life; when you start giving them an allowance.

Depending on their level of maturity, you should be able to start this when they are very young; 4 or 5 years old. Start them out with $1.00 per week that they can use for whatever they want, but they have to put aside a quarter a week. Use a piggy bank, jar or other container. When it’s full, roll up the quarters and deposit them to a savings account. Most banks offer “minor accounts” which are accounts for children that do not have minimum balance restrictions.

As they get older, and their allowance is increased, their contributions to their savings accounts should also be increased. Be sure to make it clear that they are saving for their future and that they will not be allowed to spend this money.

Your children will likely want other things, like game systems, a computer or a car. They will need to open another savings account that they manage for these items; however, they must deposit to their home/retirement account first. They may gripe about it, but hopefully, they have already developed good habits and accepted the fact that this is how it is going to be. They’ll be very thankful for this teaching when they grow up and need the money.

Education and Career before Marriage and Children in West Bloomfield

Star-struck teenagers fall in love and think that their love is all they need to survive. Even young people in college think they can handle school and marriage. Some can; however, in most cases, this is a recipe for failure, in school as well as in the marriage. The number one cause of divorce is financial trouble.

Children need to be taught that good things come to those who wait. High school and college years are much more enjoyable and productive if they remain single and unattached. Remind them that they still have a lot of growing up to do before they are ready for marriage. Of course getting them to believe this may be difficult. One suggestion is to remind them of a time when they thought “boys were gross” or “girls had cooties.” Then, they grew up and their opinions changed. Assure them that their opinions will continue to change as they grow and mature.

Avoid Debt when Possible

Don’t be so quick to use credit cards unless you already have the money to pay for your purchases when the bill comes in. Credit card interest is usually very high; therefore, allowing credit card debt to build up is senseless. Avoid draining your savings to pay credit card bills. As soon as your children are old enough, they should have a checking account and they should know how to manage it.

Most people are not able to buy a new car without a car loan; however, they can shop around for a good rate. If your teenager has been saving money in the bank since early childhood, chances are good that you and they have a good relationship with the bank and that you will be able to get a good interest rate. Check into different terms, like 3-year, 4-year or 5-year loans. Compare the rates and finance charges of different loans and make a good down payment. Make additional principal payments each month and pay off the loan as quickly as possible. Hopefully, the car is still in good shape when it is paid off; this way, the money that was being used for payments can be put into savings.

Pick the Right Career

If you have been fortunate and you and/or your spouse are very successful, remember, your children may not want to follow in your footsteps. Sure, you may like the idea of your children taking over the family business, but if forced into it and they don’t like the idea, the business will likely crumble.

Be sure your children know who to seek for guidance and advice when they approach college age. Teachers, guidance counselors and family members can be helpful in offering advice, but the ultimate decision is up to the child.

If your children make wise choices and enter a career they love, they will likely be successful and do you proud. They will be on the right path to building their own wealth so you can relax and enjoy your retirement savings without having to support them during their young adult years.

Time to buy a Home in West Bloomfield

Encourage your children to live at home as long as they are still in school. Sure, they will want to be on their own, but as soon as they move out, their savings will likely be depleted. Sharing an apartment and splitting bills with friends will sound ideal; however, this rarely works out for the best. When one cannot meet their obligation, the fighting and arguing starts, resentment builds and the friendship crumbles, along with their credit scores.

Teach your children (now, young adults) that homeownership is far better than renting. Explain equity building and how this is also the beginning of their retirement savings. Hopefully, with all they’ve been taught since early childhood, this will not sound as foreign to them as it does to many young adults today.

In addition to everything you have taught your children teach them not to live beyond their means. If your child qualifies for a $200,000 mortgage, they should begin looking at homes priced around $130,000 to $150,000, or less, to allow them to continue saving. Savings and quality of lifestyle are equally important; savings should increase as quality of lifestyle improves.

Do not wait until your children are entering college or working to begin teaching them about saving money. It is important that they begin developing good habits and money management skills at a very young age. They also need to learn about credit at an early age; preferably, before they are old enough for that first credit card.

Michael McGee is a financial advisor who can continue educating your children when they are old enough to make their own financial decisions and to open their own retirement account. Michael can help you with everything from college planning to retirement planning, establishing a 529 college savings plan, traditional IRA, Roth IRA, SEP IRA, 401-K, family savings and more.

Michael McGee shares wealth building tips while providing help with financial planning, traditional IRA, self-directed IRA, Roth IRA, SEP IRA, 401-K plans, health savings plans, college funding, 529 college savings plan, tax shelter, investment savings, family savings and financial security for consumers and business owners in Oakland County, Pontiac, Waterford, West Bloomfield, Farmington Hills, Southfield, Royal Oak, Rochester, Troy, Novi, Wayne County, Detroit, Dearborn, Livonia, Redford, Romulus, Westland, Northville, Plymouth, Canton, Trenton, Taylor and neighboring cities and communities.