By: Rich in Calif

Rich in Calif — Thu, 11 Jun 2009 22:41:21 +0000

When I turned 18 my mother suggested that I take out a loan. I told her I didn’t need anything, but she said I needed good credit and establishing credit was a learning process. I took out a loan for $1,000 and put the funds into an interest bearing account. Each month I made my loan payment early, thus establishing a great payment history and then paid off the loan early and received a letter from the bank stating I’d paid off my loan “better than agreed”. The difference between the interest I earned and the interest I paid on the loan was “my cost to establish my credit”. Next I requested credit at a local store or two (this was before credit cards were in mass use) and purchased items on credit and paid them off early. This exercise helped me to understand the importance of having good credit and the importance of paying on-time to avoid finance fees and penalties.
There are many tools, available for free, to teach children and young adults how to handle money. Charles Schwab offers a course called “Managing Your Money” or MYM which has been very successful. Our local Boys and Girls club uses this package to help their members learn more about managing their own money. Another useful training tool for children is “Make More Than Your Parents”. This is a CD and workbook based course offered from VectorVest Production. Chapters include; Earning Money, Spending money, Saving money and Investing money, plus a list of investment terms and their meanings. The CD provides the student a set of tools / templates to start their own company. The book also includes a list of other books to help children determine their career path, find a job, effective teen habits, and a lot more. I received my copy of this book / CD free because I was a client of VectorVest. I contacted VectorVest and they said “unfortunately, this tool is no longer available”.
Rich in California

Comments on: Using the Recession to Talk to Your Kids About Money

By: Rich in Calif