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President’s Council on Financial Capability’s Beth Kobliner on how to teach your child financial planning.
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"The net worth of the average American family is at the lowest level about two decades but your kids can still find fortune if they start right now." "Here with the steps you need to take to turn your child into a millionaire one day, Beth Kobliner.
She is a member of the president's Council on Financial Capability and author of "Get a Financial Life." Teach us please, so many of us are so worried about paying for our kids college down the road.
But let's start first with five steps that are really important to get your kids on the road to becoming millionaires one day." "Absolutely.
You know I think the big crisis right now is that kids don't know with this information.
As we know, grownups don't know it, and they don't feel capable to teach their kids.
So we have moneyasyougrow.org, which just came out which talks to children -- and to their parents -- about how to save, how to invest, how to make the most of compound interest, and the specific twenty basic essentials they need to know as they grow." "Can I just talk about the number one point on your list -- which I think is absolutely the most important point -- delayed gratification.
There is so much instant gratification in this culture because of television, because of all the stuff you see in New York, you have to teach delayed gratification to kids.
How do you do that?" "There's so much research now that shows that if you teach a child to wait -- that they can't buy something the second they see it, that they have to wait -- that will go a long way to helping them in many aspects of life.
So when you go to the park, you say, 'You know what, we have to wait for the swings.
We have to wait for your birthday, we have to wait for a holiday, and that has a lot of the influence down the road to helpiing a kid learn, 'I have to wait and save up money in order to buy something I want.'" "And that leads up to opening a savings account, you know when Grandma gives the kid twenty dollars, instead of saying ...
my kids, my kids want to go straight to GameStop -- " "Exactly." "-- you say go straight --" "--to the bank! Old fashioned, open a bank account with your kid, let them see what they're doing; tell them that it's federally insured, that means it's safe, and and that you're going to earn some interest.
For eleven to thirteen-year-olds kids though, you really need to teach them that a credit card is like a loan.
But don't give them a credit card." "But even myself, I mean when I was growing up I was told only deal with cash, until you're old enough, is that still a lesson that applies?" "You know, I gave my kids cash recently for the holidays and they said 'What am I going to do with this? You can't buy iTunes with cash.' So it's very important to go back to the basics and tell your kid, 'You know we're gonna use cash, we're gonna buy things, we're gonna wait.
I think for the older age, when you're talking about college, you have to start saying, 'Look you have to factor in the cost of the school when you go to college, and you need to start that conversation when a child is fourteen or fifteen, not wait until they're eighteen.
"And then you're looking at college costs; if your child is about ten years old right now, what are the best ways to save for college and to cost compare?" "Well on each college they're required to put what's called the net price, which basically says what the average person will pay for the school, so you want to look at moneyasyougrow.org -- I have for that age group for college, where to look, how to look, and you have to be smart about it." "Now the biggest cause of bankruptcy for young people is the cost of medical emergency, so we do have the new health care law which does insure kids up to 26 years of age, but is there anything else we should do besides that?" "Well that is the key, and you know anybody with a kid 26 or under is hoping that that would rule will stay, that people will still be able to get their get on their parents' health insurance policy if they're under 26, because that is the cheapest way to buy it.
If you can't get your parents' health insurance, then a lot of people in their twenties are going to have problems because unemployment so high right now.
"Young people need to go on this web site, moneyasyougrow.org.
These are important things, teach them now and they will become millionaires if they are financially savvy." "I think that's really really true we have to sort of focus in on kids and teach them what they need to know and 200,000 people within the last month have logged on to look, so I think the message is getting out." "Even if they aren't millionaires, as long as they don't go into debt." "Yes, don't get into the negative." "Thank you Beth.
Beth Kobliner, of the president's Council on Financial Capability."
