We all have financial goals in life, however some do not know how to achieve them. Teach your kids about financial goals and financial plans. By making short-term and long-term financial goals, plans can then be created to reach those goals.  For example a new video game system may be on the wish list.

Questions to ask are:

How much will it cost?

How much can we save at a time?

How many months do we have to save for it?

Teach your kids how setting financial goals is a skill they will be using throughout their lives. They will most likely be doing this for purchase of a car, vacation, holiday presents, home purchase and retirement.

It is important to teach children about how to maintain good credit. Teach them how the best loan interest rates only go to those with the best credit. Also future landlords and employers may check their credit when making a decision about them. The concept is a simple one. Keep a low balance on credit cards and pay your bills on time. You may want to talk to them about the pink slip loans you or someone you know has as a means of a short-term finance option, as well as all the repercussions from such loans.

You may also want to find additional information on how to build up credit should they find themselves in a financial situation. Maintaining good credit isn’t always straightforward as it may seem, so teaching your children how to build back their credit could be another good lesson for them. It is more likely that this will be the situation they will begin independent life with since most of their credit will be affected by student loans or other uncontrollable factors. Talking to a bank or another financial institute or company could be helpful in teaching your children about credit, debt, and finances. For example, you may want to visit NovaCredit.com, where you will find information on how to build up credit within the United States. This is great for students who wish to study or work within the country. Doing a little research into financial help and options within another country could be an excellent way to educate your children, should they need it in the future.

Help your teen to create a mock budget using a possible future income. Go over with them all of the expenses that an adult faces (rent/mortgage, credit card bills, taxes, health insurance, auto insurance, auto repairs, entertainment expenses, gasoline, etc.). Let them get a feel for how much one can afford and how to budget so you can have money left over. Share with them the strategies you use in order to manage your money.

Teach your children the urgency of keeping private information about themselves a secret. Credit card numbers, bank account numbers, social security numbers must not given out. Review with them what to do if their personal information is ever stolen.

Explain the difference between credit cards being a loan you have to pay back (usually with interest) and debit cards subtracting from your own funds. Also go over with them what to do if the card is lost or stolen.

Teach your kids how credit cards work. Most children view credit cards as free money which isn’t true so the sooner you can get them out of that mentality, the better of they will be in the future – this credit card interest calculator can be used as a tool to show them that it’s not true.

You will need to explain to your children what the benefits of a credit card is while also making it clear that there are risks. They should know that they can build a good credit score with their cards so it’s important to keep on top of repayments and they don’t allow themselves to make purchases they know will be hard to pay back. If they know that they will have to get a no credit history credit card, to begin with, because the banks don’t know if they are reliable with payments until they build credit, they will be able to narrow down their search when looking into their option, should they choose to get a credit card. Once they have built credit, they will be able to get better rates on things like mortgage or from loan lenders. They can even use their score to get a second card with a higher limit.

Review with them how the money must be paid back and how interest works. Make sure you also explain how some adults get trapped with debt by only making minimum monthly payments. Show them how different cards offer different interest rates.

Make sure you teach how to use an ATM. Also teach them how to do deposits and withdrawals in a bank branch.

It is important to teach kids the basics about banking. Discuss the purpose of having a checking account, savings account and bank certificate of deposit and how they all work. A great math lesson would be to make sure you mention how minimum balances, overdraft fees, ATM fees and interest rates work.