Financial literacy: How to teach your kids to save for retirement even if you’re struggling

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File this one under “do as I say, not as I do:” If you’re struggling to save for retirement, whether out of bad habit or bad luck, you can still teach your kids some valuable lessons. that can help them establish a solid foundation for planning and saving for retirement.

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The first step, especially for young children, is to teach them the concept of making money, according to the financial website Empower. It may seem obvious to adults, but children don’t come out of the womb knowing the importance of finding a job and earning a living.

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Start your kids early by paying them to do some household chores. This does not necessarily mean paying an allowance, as certain tasks should be considered part of growing up (making the bed, clearing the table, etc.). Instead, point out that the money they earn is for specific tasks that go beyond what is expected of them.

Where possible, invite your children to follow your work so they can see how the world of work works. When they’ve accumulated enough knowledge, you can start asking them about careers they might one day want to pursue and advising them on how they can position themselves to succeed in those areas.

It’s also important to teach your children the difference between wanting something and needing something. It basically comes down to letting them know that they will always need the basics – food, shelter, clothing, healthcare, etc. – and will probably need certain gadgets to succeed in the world (computers, mobile phones).

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Teach them how to budget for the essentials first. After that, teach them to set aside a certain percentage of what is left over for savings – first emergency savings, then retirement savings. Early in life, this might take the form of saving your kids an expensive item so they can buy it themselves. Get them into the habit of setting aside one fund for expenses and the other for savings.

As your children get older (high school and up), it’s time to start setting financial expectations. Citizens Bank recommended starting by acknowledging the financial challenges they will face. For young people graduating from school and entering the workforce, this can range from building savings from scratch to managing thousands of dollars in student debt.

Citizens Bank also recommended explaining that planning for the future does not mean abandoning the present. It goes back to the idea of ​​creating separate funds for spending and saving – but only after essential bills have been paid. The spending fund can be spent on entertainment, while the savings fund can be divided into rainy day savings and retirement savings.

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It’s a good time to also teach your kids about the power of compound interest – and the importance of saving early to ensure the interest they earn has a long time to accrue and accumulate. As Citizens Bank noted, setting aside $250 a month starting at age 25 can leave you with twice as much money at age 65 as you would earn if you waited until age 35 to start saving.

The most important lesson you can pass on to them is that saving money should become a habit, something that is so much a part of your children’s lives from an early age that they don’t even need to. ‘think it. It takes the discipline to start in the first place and the commitment to stick with it for decades.

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Even if you personally haven’t followed the rules as diligently as you might have, the ups and downs you’ve experienced can provide valuable insight into what your kids should and shouldn’t do when it comes to saving. -retirement.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who has previously held positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work has also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal, and Business North Carolina magazine. He holds a BA in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting has earned him awards from the North Carolina Press Association, Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A North Carolina native who also writes fiction, Vance’s short story “Saint Christopher” placed second in the 2019 Writer’s Digest short story competition. Two of her short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. Her first novel, Voodoo Hideaway, is published in 2021 by Atmosphere Press.