According to Bankrate.com, one in four Americans has more credit card debt than emergency savings and that number is going up. And according to Time.com, more than half of Americans have no emergency savings at all.
The average age to get a first credit card is now only 20.8 years and steadily dropping. Isn't this trend teaching our youth to expect instant gratification and to buy things right away even when they don't have the money? I feel that it also teaches procrastination and the "Don't worry I can pay for it later" type of mentality.
According to CNNMoney.com, the average American household with at least one credit card has nearly $15,950 in credit card debt! Do you think that number is going up or going down?
Conventional wisdom used to be that it was necessary to put at least 10% of your money away for retirement. Just a couple of years ago I heard that it needed to be closer to 15%, if you really wanted to retire, much less, be living well in retirement. However, I just read an article that suggests that after taking into account increasing lifespans, decreasing employment benefit plans (pensions and employer matching programs) as well as the potential for changes in social security, that elusive rate actually needs to be even higher - try 20%! It seems that as the years go on, that number is only going to get higher and higher. As a matter of fact some experts are even saying that in theory, you really need to start saving for retirement when you are 10 years old! Good luck trying to get a 10 year old to start saving for retirement.
So, in a nutshell debt is going up while savings is going down, and it looks like it is only getting worse.
How can we reverse this trend for our children?
There is no easy solution, but in order for us to reverse these trends it is imperative for us as responsible adults to
- Learn as much as we can about how money works and to start the process of getting our own finances under control.
- Become good financial stewards and good examples to our kids. Remember kids do not do what we say, they do what we do.
- Pass this knowledge on to our kids through the many daily "teaching moments" and by reinforcing any good financial habits. Repetition is key!
Nancy Phillips is the creator of Zela Wela Kids and has a mission to help increase the financial and life success skills of our youth globally. Nancy's Zela Wela Kids series of childrens books teach kids many very important financial as well as life lessons in the form of stories. For instance, one story teaches the importance of dividing money into different meaningful categories like Giving, Investing, Saving and Spending, so that all of it does not get spent at once - an important habit to take to adulthood. Another story teaches the difference between needs and wants and how a wish list for a child can translate into a dreams and goals list as they grow older. And, yet another story teaches kids how becoming more entrepreneurial can be fun. How important is that in this economy? Nancy also has an audio series that helps adults teach kids about critical financial skills from as young as two all the way up to their teen years in an age-appropriate manner.
Also, when you visit Zela Wela Kids - Financial Life Skills Resources for Kids and Parents and enter the Coupon Code "FinancialConfidence", you wil get 15% off your order.
So, let's take the first steps towards teaching our kids good financial habits as early in their life as possible. Together we can start reversing these negative trends and help guide our kids towards a much better financial future!
I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any comments, please post them below, otherwise, feel free to contact me.