Tips For Teaching Kids How To Buy A Home
Apr 11, 2021
Homeownership is a hard-to-reach goal for many young adults. The rising costs of houses coupled with high student loan debt mean some young people don’t have the same buying power as their parents did. And with recent events disrupting our economy, it could make it even harder for young adults to save money moving forward.
Because of the financial hurdles many young adults face now, it’s vital for parents to teach their kids financial literacy – and start them early.
Financial literacy for kids means giving your children an all-round education on money management. While each family’s financial circumstances are unique, there are valuable lessons available in all home budgets.
You might think your children are too young to talk about money. However, they’re at the age where they absorb everything. This is your chance!
This guide will help parents teach their kids to achieve a better position for homeownership.
Start a reward system for children: Start with small chores such as folding the laundry or cleaning the dishes. Once they have completed the job, they earn stickers, a toy, a coin, or something else of their choosing. The goal is to help them develop a sense of ownership for completing a task.
Discuss wants vs needs: The first step in teaching kids the value of saving is to help them distinguish between wants and needs. Explain that needs include the basics, such as food, shelter, basic clothing, healthcare, and education. Wants are all the extras—from movie tickets and candy to designer sneakers, a bicycle or the latest smartphone. Take them on a shopping trip. Give them a specific amount of money they can use to buy what they want within that budget. Doing this exercise opens up a dialogue between you and your child about how money is a limited resource while helping them understand what items cost.
Set Savings Goals: Helping children define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. If they want to buy a $50 video game, for example, and they get a $10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate.
Have Them Track Spending: Part of being a better saver means knowing where your money is going. If your children get an allowance, having them write down their purchases each day and add them up at the end of the week can be an eye-opening experience. Encourage them to think about how they’re spending and how much faster they could reach their savings goal if they were to change their spending patterns.
Leave Room for Mistakes It’s hard to relinquish control as a parent, but it’s also good as your child needs the freedom to make their own decisions. The reason for this is you want them to learn through doing even if they make mistakes.