by Kate Maier, Central Planning, Wealth Enhancement Group

Many people start their careers without a good idea about how to balance their spending with saving, and thus forego putting aside savings as their spending quickly expands to meet, or even exceed, their income. As a result, the closer to retirement people get, the more they end up having to sock away every spare dollar in hopes that they can start to make up for their youthful indulgence.

A lot of these people could have avoided such problems if they had been taught to save early on in life. Although it’s not normally a subject in school, financial and saving education can be just as important as math and science. The earlier good financial habits are started, the better off a person will be as he or she becomes more financially independent. Parents can help by showing financial responsibility themselves and by sharing with their children what they’re doing to save and why.

First, don’t be afraid to be frank with your children about financial issues. The more they become acquainted with spending and saving, the less daunting it is as they get older. If they get an allowance, insist that they save a certain percentage of it. Open a savings account for them, and introduce them early on to checking, savings and CD accounts. As they get older you may even want to bring them along to meetings with your financial advisor so that they are introduced to other methods of saving, such as stocks, bonds, annuities and IRA accounts.

Also, have your children save up for items they would like to purchase, be it a new bike or simply that new pair of jeans they “must have.” This will hopefully start a savings habit as well as teach them the satisfaction of earning what they get, instead of constantly experiencing the instant gratification of having you buy things for them. This can also lead to a discussion about loans and credit cards. Many people get in trouble as teenagers and young adults when they are suddenly inundated with credit card offers, and the concept of “spending within your means” escapes them, as “their means” tend to be the credit card limit instead of what they can afford in monthly payments. If your children are already used to both saving and paying back any money they’ve borrowed, they are more likely to be able to handle their new credit cards without much problem.

There are many ways to teach your children financial responsibilities, and the ideas listed above are just a few of them. If you would like help teaching your children financial discipline, contact your Financial Advisor. He or she would be happy to help you come up with a plan.