Tuesday, 18 June 2013

Credit and Debt

Money Smart concept #5
Credit and Debt
I will be irresponsible if I do not encourage parents to expose children to the concept of credit and debt. When my child was younger, she thought that if I paid for an item using my credit card, then it was free because she didn’t see me using money. Some irresponsible adults may share this kind of thinking.

            The credit card tempts you to spend more than what you can pay for, and if coupled with a “bahala na”(come what may) attitude, you will be in deep debt before you know it. Few of us know the pitfalls or credit and debit. We learn them as we go through life and after making expensive mistakes. Why not spare our children by teaching them an early lesson that nothing is free. We have to make sure that we only buy what we can pay for. We should actively model this in our own lifestyle.
            Communicate clearly the decision we make on using credit. “I will pay for it first with my credit card because I only get my salary at the end of the month. I will  pay my credit card company as soon as I get my money.”
            When your kids borrow money, ask them when they will pay you back so that it is time bound. When they promise to pay you, make them true to their word. You can even ask them to officially sign an I.O.U. statement. Its is important that we instill in them the discipline to pay their debts on time.

C. Opportunity to make money.
It may sound cliché but it is definitely true:
“Money does not grow on trees. Being money smart does not only mean that a person understands how to manage and grow money.”
            It also means knowing how to make it. There is a separate chapter on starting a business but I want to underscore in this how children can be exposed to opportunities to make money.

Earn your allowance.
Learning to be money smart should be a joint effort by the home and the school. Take small stops at home. You can ask your child to do chores for a free. Don’t a price on acts of kindness that you would normally expect of children but do recognize work that would require more effort from your child. These include cutting the grass, painting a wall or sorting out the laundry.

If you own a business give child a job in your business.
Hand on exposure to how business is conducted by parents teacher children invaluable lesson, Manny Villar, a real state developer and politician, says he often helped his mother sell goods in the market. That exposed him to the dynamic Chinese traders and how business can be created.

Turn a project into a business.
You can start a small business project right at home. Baking Christmas goodies is always a good project for kids to pursue. I know kids who have made extra cash by helping bake goodies or by helping sell the food made in their kitchen.

Watch out for opportunities.
Teach kids that opportunities to make money are all around them. They just have to keep an eye out for them.
Lray Villafuente, a politician and entrepreneur, shares that he always had an enterprising spirit. When he was in grade school, he sold stickers to his classmate to earn extra money, later on, he sold trendy shoes to augment his allowance. Whatever the product he saw a demand for, he would always find a way to make money out of it.
As a college student taking up political science at De La Salle University, he sold La Salle shirts in the midst of UAAP fever. “I love UAAP,” he says so I got a friend who could design, and a friend who could make T-shirts, and I brought them together and produced shirts which we sold during Ateneo-DLSU games”. Today, his gifts and décor company that exports Philippines products is worth P400 million

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