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Ways to Make Your Child Financially Responsible
As many parents are aware, children are inherently curious and want to learn more about the world around them, including money. They're naturally going to want to know how much things cost and how to save for something they want. As a parent, you can take advantage of this by teaching your child about credit cards, budgeting, and other financial topics at an early age. In this article, we'll be going over ways to make your child financially responsible.
Go Over the Basics First
Teaching your children about such an important topic can seem a bit intimidating, especially to newer parents. So, it begs the question; how do you go about educating your child about money? This is actually a lot simpler than you think. The answer is to start while they're still young. Begin is by introducing your child to the concept of money, and how it works. Some of the best budgeting apps are so simple that even a young child can understand the concept. Or this can be done by showing them an item that costs $2 at their age, and then explaining that you need to earn two dollars in order to afford it. From there, move on to more complex topics like interest rates, inflation, taxes and compound interest.Teach Them How to Budget
A budget is simply a document that outlines how much you spend and how much you have left over each month. Having a budget allows children to see where their money is going. This can help them recognize areas where they might be able to cut back on spending if they so choose, like eating out or subscriptions. It also helps children understand that there are differences between wants and needs, which allows them more freedom with their finances because they won't feel guilty. You'd be surprised how many people spend hundreds of dollars on things they don't need. Instilling this information into your child from an early age is very important as it helps them differentiate needs and wants.Cosign on Their Student Loans
You might be wondering how cosigning can help your child be more financially responsible. A cosigner is someone who helps people get approved for a loan, which is mostly common with student loans. However, should the primary borrower miss their monthly payment, the responsibility will fall to the cosigner instead. But this is yet another way you can ensure your child manages their money correctly.Having the added pressure of risking someone else's livelihood may be a tough lesson, but it's certainly efficient. However, there are certain criteria every cosigner must meet. Make sure to review the Earnest student loan cosigner requirements before going ahead with it. On that note, there are benefits to becoming a cosigner for your child's student loan. For one thing, you can write off your taxes. In addition, the interest rates may be lower than they would be without cosigning.
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