The average American family’s net worth today is at its lowest level in the past two decades. Still, there are ways for parents to turn their kids into millionaires.
Beth Kobliner, author of “Get a Financial Life” and a member of the President’s Council on Financial Capability, says that any parent can turn their kid into a millionaire by teaching them to be financially savvy, with these five steps.
Parents need to teach children that they cannot buy something the instant they see it. When kids learn to wait for something, this influences their future spending behavior. Kobliner says that children need to learn how to save money for items that they want to buy.
Open a Savings Account
When grandma gives the kids money, take them to the bank to open up a savings account. Explain to kids that a savings account is federally insured and that they need to deposit money a few times a year.
A savings account will also teach children about interest and the role of savings in their life.
A Credit Card is Just a Loan
Teach kids that a credit card is a loan and that they need to save up their cash if they want to buy something.
This discussion needs to be had with kids not only when they are young, but also at ages 14, 15 and when they are preparing to go to college. Kobliner says that high school students need to factor in the cost of a school when they are applying to college.
Compare College Costs
Students who plan to attend college need to factor in the different costs of college.
According to Kobliner, each college is required to state their net price, which is the average cost of attending that college.
Students should compare the net price of colleges they want to attend, use college cost calculators, and determine early on how much debt they want to accumulate.
Buy Health Insurance
With high unemployment among young people, purchasing health insurance is very difficult. For young people, the biggest cause of bankruptcy is the cost of health expenses.
But, under the new health-care law, kids can stay on their parents’ health insurance until age 26, if they are not able to buy their own insurance.