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Help Yourself to Help Your Children
5 money management secrets that every parent should know.
By: Jive Communications
According to expert money manager Bryan Sommer, there are 5 simple tips that parents can practice so their kids follow their lead towards financial success.
#1 – Debt: Avoid it unless buying something that is going up in value and/or provides sufficient cash flow to cover interest payments. Don’t go into debt to buy a car.
#2 – Buying a Home: A common rule of thumb is to spend two to three times’ annual household income. Spending too much on a home can overextend one’s ability to make payments and can put undue stress on the family.
#3 – Savings: Put aside 10% of gross income for unexpected expenses, college education or other important goals. Save another 10% of gross income for retirement (consider saving more when nearing retirement with a nest egg that is small).
#4 – Emergency Fund: Have between three and six month’s worth of expenses saved up and available in the event of emergencies. It is important to have an emergency fund to cover expenses when there is a sudden loss of income or other financial emergency.
#5 – Retirement Needs: During your retirement it is common to need between 50% and 80% of pre-retirement income. A common rule of thumb is to use the lump-sum assumption which says the retirement nest egg should be about 20 times annual retirement expenses that aren’t covered by outside income (such as social security or a pension).
Sommer, who runs a popular website for money management, http://kidsmoneymanagement.com claims these ground rules will not only create a more financially sound family, but will teach kids by example some of the core money management practices every household should incorporate.
“I’ve grown up with a father who is a financial advisor, and as I continue to absorb his financial wisdom it has become my passion to share this money management knowledge with other parents and their kids.”
Sommer has a downloadable guide entitled, “Money Management – 5 Industry Secrets Every Parent Should Know” at http://kidsmoneymanagement.com which explains in more detail money management tips to build a strong financial foundation.
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Kidsmoneymanagement.com is a popular website that shares money management tips and strategies for parents and their kids.