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Teach Your Children These 5 Crucial Personal Finance Lessons

By U.S. News & World Report

One of the most important roles we play as parents is educating our kids about finances. It’s one lesson they likely won’t learn in school and that they shouldn’t have to learn as adults in the school of hard knocks.

The recent financial crisis underscored the need to teach children about personal finance. After all, the crisis was caused, at least in part, by people forgetting some simple lessons about money, including this one: “Don’t borrow more than you can repay.” You can help your kids avoid learning these lessons the hard way by teaching them to be smart about money while they are still young.

Here are five important lessons to teach your kids about personal finance.

[See: 12 Millennial-Inspired Ways to Spend Less.]

1. Money doesn’t grow on trees. As anyone who has visited a grocery store with small children can confirm, kids are often confused about money. After all, they see us scan a card or press a button online and walk away with money, groceries and whatever else might be on our list. It can easily seem to them that there is an endless supply of money. It’s important to explain how those cards you’re using actually work. Whether they are debit or credit cards, they are tied to real money that must be earned or repaid. You can reinforce the lesson by taking them on a visit to a bank and setting up a savings account for them at a young age, so they can put money in and watch the balance grow.

[See: Your Month-to-Month Guide to Savings.]

2. Money is the reward for work we do. Young kids see adults whip out the plastic cards and may not associate the money we spend that way with the work we did to earn it. One of the best ways to teach kids about this aspect of money is to give them opportunities to earn money for their own work, whether it’s doing jobs around the house, meeting their reading or academic goals or other behaviors or work your family chooses to reward. This teaches a work ethic and makes them more invested in the choices they make with that money.

3. If it’s worth having, it’s worth saving your money. Let’s face it: Kids are constantly bombarded by cool toys and games that seem fun and exciting. It’s only natural to want these things. But if we give in to every request, we are not teaching a very valuable lesson about how to get the things we want in life. The idea of saving for what we want is a critical one. In fact, a 2016 study found that one in three Americans has no money saved for retirement, according to the survey from GOBankingRates, a website connecting readers with interest rate information on various financial services. Get kids excited about the benefits of saving by providing an opportunity to save for the things that they really want.

[See: 10 Things Teens Should Know About Money.]

4. Spending means making choices. One of the lessons kids need to master is the idea that if they buy something now, that means they may not have money later to buy something else. You can help them learn this lesson early by requiring that they make choices with the money they save from chores and gifts. Kids may want a Lego set and the candy next to the grocery register. Your job is to help them think about their goals so that they make a smart choice.

5. Understand the basics of credit and investing. The statistics are shocking: Nearly two-thirds of Americans don’t have basic financial literacy, according to the most recent National Financial Capability Study from the FINRA Investor Education Foundation. This leads to irresponsible credit usage and less-than-wise investment choices. As kids get older, they can learn about the difference between renting and owning, how mortgages work and how interest applies to both credit and the investing world. That knowledge will help guide their behavior as they age.

It’s never too soon to start teaching kids to make good choices with money. As kids get older, they’ll be ready for more complex lessons about money, but these are a few that you can start teaching today.

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Teach Your Children These 5 Crucial Personal Finance Lessons originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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