10 Essential Financial Life Lessons—What to Teach Your Kids Before They Leave Home

If the thought of hours in the car with your kids doesn't thrill you, here are some tips that can make your summer road trip downright enjoyable.

The moment you have dreaded has finally arrived. Your baby is leaving the nest. Some of the most valuable lessons you can impart should be shared right now, before they head out into the world.

In case you need help picking some wisdom to pass on, we’ve asked top money managers and financial pros to weigh in with their favorite lessons you should share with your child. You might learn a little something, too!

Lesson #1: Understand Debt

It’s important to understand what student loans and other debts will really cost, both today and in the long run. Catey Hill, author of the upcoming book “The 30-Minute Money Plan for Moms: How to Maximize Your Family Budget in Minimal Time,” suggests using real examples with dollar amounts to demonstrate. She says, “Bankrate has a calculator that shows what paying the minimum looks like. Use the cost of anything that might be relatable to your teen, then plug those numbers into Bankrate’s calculator to show how expensive an item can get when you pay just the minimum.”

Lesson #2: Know What You Expect to Earn Before You Borrow

When weighing whether or not to take out a loan to pay for school, College Ave Student Loans CEO and cofounder Joe DePaulo suggests that you think about the type of career you see in your future. “It’s okay if you’re not exactly sure what you want to do yet, but having an idea of your future earning potential will help you avoid over-borrowing now,” he says. “It’s a general rule of thumb not to borrow more for school than you expect to make in the first year of your professional career.”

Lesson #3:  Save, Save, and Save Some More

Save what you can, and make saving a habit by revisiting your spending and savings goals each month. David Osborn, entrepreneur and coauthor of “Wealth Can’t Wait,” says that by simply mastering the art of saving and investing, you could end up with a fortune. If you don’t understand money instinctively, Osborn suggests making it a priority to learn about wealth by reading or listening to roughly four books per year about investing. “Learning consistently leads to greatness over time,” he says. “Think of your extra dollars as employees, and if you put them to work for you, they will one day pay you all you need to live and more.”

Lesson #4: Set It and Forget It

Automating saving can lead to successful saving. Chad Parks, CEO of Ubiquity Retirement + Savings, suggests using a digital platform that saves for you so you don’t have to think about it. “One of my favorites is Digit.co, which analyzes your bank account and spending patterns,” he says. “The software looks at your daily checking account balance, learns your spending habits, and automatically moves small funds to your Digit account to increase savings. The amounts vary depending on your checking balance and spending habits for that day/week/month.”

Lesson #5: Learn How to Cut Back

If at any point you realize that finances are tighter than expected, conduct an assessment and see where adjustments can be made. Jared Kaplan, CEO of OppLoans.com, recommends that you “create a chart and total your income and expenses and compare them. If you spent more than you made, that’s a clear red flag.” Once you understand the inflow and outflow, you can figure out where to cut by separating wants from needs.

Lesson #6: Plan for the Unexpected

At school and beyond, be prepared for things to cost more than you planned. DePaulo recommends looking for ways to manage your spending to keep costs down.  “Borrow instead of buying school textbooks, maximize your pre-paid dining plan instead of eating off campus, and plan for one extra trip home each semester,” he says. “Finally, get advice from current college students to find out how much they are spending on extracurricular activities, school supplies, going out with friends, and more so you can create a realistic budget.”

Lesson #7: Make Your Bank Work for You

Today’s banks do a lot more than they did “back in our day.” Parks recommends the online bank Simple. “Simple has single-handedly changed my spending behavior and offers two savings features—Goals and Safe-to-Spend,” he said. “Goals allow me to save for anything, from my upcoming trip to Maui to my student loan payment, by auto-transferring money each day to the Goals. My money is still in my checking account (Simple does not make you open a traditional savings account), but when I look at my account, I just see a Safe-to-Spend balance, which excludes funds in my Goals.”

Lesson #8: Work Hard

Some young people struggle with lack of motivation and it’s our job as parents to help them understand the reality of working hard, especially when they have debt. Hill says, “Know the value of hard work—of picking up a job (or a second job) if you have to. Many of us will have debt at some point in our lives—and extra income can be one of the best ways to pay it down quicker.”

Lesson #9: Find a Side Hustle

Students have busy schedules, so a traditional job can be tricky. Thanks to today’s “gig economy,” though, there are lots of ways to earn money. Osborn says, “By going out and cutting grass, driving Uber, or even selling old textbooks online, you can create an additional stream of income. The more money you make, the more money you save, the more money you can invest!”

Lesson #10: To Ivy or Not to Ivy

Even if your child is accepted into a top school, it doesn’t mean it’s the right choice for their career path. Margot Bisnow, author of “Raising an Entrepreneur” suggests measuring the expense of school against the likely income generated by the career they intend to pursue. “Will going to Dartmouth help them earn more money as a songwriter ten years down the road? Probably not,” she says. “So set aside your ego and their ego, and ask yourselves the tough question: can we justify spending all this money on an elite private school? What’s the ROI, besides bragging rights?”

Learning financial literacy can be tough, but it’s a necessary life lesson for your children. Send them off with the best chances at success by helping them understand how to budget, how to save, and how to check their credit score (they can check it for free on credit.com) and keep their finances secure.

Image: Imgorthand

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5 Financial Lessons I Learned in the Military That Anyone Can Benefit From

A financial coach shares the money skills she learned in the U.S. Air Force.

When I first joined the U.S. Air Force, I was scared out of my mind. I had just committed four years of my life to something I wasn’t 100% sure I could do. Not to mention, I was getting yelled at and working harder than I ever had in my 19 years of life. There was a lot to process. Through it all, I learned many life lessons.

It wasn’t just life skills I picked up in the military. I also learned financial lessons. Today I’m a financial coach helping others with money. My service in the military laid the foundation for my financial career. Some of the lessons I learned there were harder than others, but each contributed to how I handle money today. Here are the financial lessons I learned while serving in the military.

1. Have Control of Your Money at All Times

Physical money management is taught early on in basic training. Every bit of cash you have needs to be accounted for and neatly organized. Our instructors asked us to write down the serial number of every dollar you earn. This reduces theft and teaches the habit of keeping track of the money you earn and spend. Not everyone keeps the serial number of all their bills, but you should know where your money is and how it’s being spent, saved or invested. If you don’t have a handle on your money, who will? You are the one in charge of your money, not anyone else.

2. If You’re on Time, You’re Late

In the service, you quickly learn you need to be ahead of schedule for everything. Being late is not acceptable. If you’re late, it could affect an entire mission. Planning to complete tasks early ensures you’ll be on time even if something unexpected happens. This applies to paying bills and saving as well — something could come up to make you late. Instead of waiting until late on the day your bill is due, take care of it in advance to ensure that even if problems come up, your financial life stays on schedule. Even better? Consider automated payments so you don’t have to worry about being late.

3. Save Money From Every Paycheck

Every supervisor I had while serving made it clear to me: Living paycheck to paycheck was not the way to live. For most young folks joining the military, it’s their first time away from home and their first time earning a paycheck. The sudden influx of money and freedom can lead to crazy spending and zero saving. (Even if you don’t serve, this is a common experience for recent graduates starting their first job and receiving their first salary.) Each supervisor I had encouraged me to live within my means and save part of each of my paychecks. By saving money from each check, you’ll build up money for when the unexpected happens.

4. Use Your Resources

As a new Air Force recruit, I didn’t know all the resources available to me. Fortunately, I had supervisors who mentored me through some of my early financial mistakes, like charging all new things for my apartment instead of borrowing household items from the lending closet on base. I could have used the borrowed items and bought the things I needed as I was paid instead of running up my credit card debt. The lesson here? Take advantage of any free resources you have before spending money unnecessarily. Asking for help to find the free resources available can save you money. (Use this free credit report summary to your advantage to see how your spending habits are affecting your credit.)

5. Learn From Your Mistakes

When you make a mistake in the military, your supervisor, drill sergeant or peers will call you out on them immediately. Mistakes will happen — they’re part of learning and growing. In the military, I learned not to try to hide or forget my mistakes but to review them to figure out ways to avoid them in the future. That way I don’t make the same mistakes over and over. When it comes to finances, this applies in several ways. For example, charging a bunch of household goods on my credit card was a mistake, but I learned ways to avoid making that mistake in the future by using free resources or only spending what I had saved for.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

Image: asiseeit

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