I was asked to do a post for Borowitz and Clark attorneys specializing in bankruptcy Los Angeles area. It is sort of funny that this post came up, because as a family we have discussed how much people rely on credit and loans. We are personally teaching our children that if you don't have the cash on hand, you don't buy it. Unfortunately we have become a society that thinks they need everything and they need it now. So instead of waiting and saving to make a purchase, we buy it on time, or with a credit card, and end up paying more than we would if we just waited and paid cash. This would not be so bad, if it was only one item, but it never stops. There is always something new, bigger, better, that "needs" purchased. I have personally seen people buy an item with credit, and end up paying far more than they would if they had just taken a few months to save and pay cash. Wouldn't it be great to just stay out of debt to avoid bankruptcy?
Another habit we are trying to teach our children is to always put a little into savings. Everyone thinks if they can't put away $50, $100, $200 a week or month that it just is not worth it. Is that true? NO! Every little amount you put away adds up. $10 a month doesn't sound like much, but at the end of the year an extra $120 dollars comes in handy. What about $20 a month? I can think of many advantages of having $240 at the end of the year. And yes, as adults we would like to save more, but it still works. Don't get disappointed and stop just because you can only save $10 or $20 a month. And occasionally, you may be able to do more.
Then of course there is budgeting. If you don't have an outline of where your cash is going, it is too easy to spend money that should go towards a bill or debt. Then you end up in more trouble because you start out the next time already behind. You have to play catch up. We really suggest a written budget. Even divide the payments up into separate envelopes so you don't use funds that are reserved for something else, like a bill. Each one of my children is being taught how to write and maintain a realistic budget.
Another thing that helps our family stay out of debt is we have taught them to shop wisely. Look for items on sale. You don't always need the name brand. Also consider a used item over brand new. And of course they all use coupons.
I hope some of these ideas help someone. If you have any great tips or lessons you are teaching your children on finances or how to avoid bankruptcy, leave a comment and share with your neighbors here At the Fence.
I am participating in a blogger campaign by Bucks2Blog and was compensated. However, the views and opinions are my own.