There are many reasons people struggle with saving money. Many factors that we are sometimes are unaware of. In this article we will discuss some of these reasons. 11 reasons you are struggling to save money 1.Cost of living It would be an injustice to talk about saving money without acknowledging the cost of living. The inflation rate keeps rising which means prices are hiking while our income remains the same. High costs of living, such as housing, healthcare, and education, leave little room for saving after meeting essential needs. 2. You don't Budget (or stick to it) A budget is to your finances what water is to your body. You might survive a day or two without it but in a long term you will feel the effects. Without a clear budget, it's challenging to track income, expenses, and savings. Overspending becomes common, making it difficult to save 3. You live beyond your means Spending more than you earn will leave you with nothing to save. Spending more than w...
Wanting the best for your children is a parental instinct. Most parents want their kids to be set for the future and have less struggles. In this article we will discuss how you can build Generational wealth.
Financial freedom is one of the building blocks to securing your kids future. Along with good values, morals, and ethics, financial discipline will ensure that your children are set for life.
Here are:
3 best ways to instill Financial discipline in your kids
Bridge the educational gap
The education system doesn't educate kids about financial freedom and personal finance. It is the parents duty to bridge that educational gap at their level.
You can start with teaching them about saving money for their favourite toys then moving upto investment. Their age will determine how much you can actually teach them.
Lead by example
Kids are like sponges. They'll absorb your behaviour and habits more than you can teach them by words.
You have to make sound financial decisions and creates habits that will lead you to financial freedom for yourself. Through observations, your kids will learn more about personal finance.
Have open conversations about money
Help your kids understand the basics of how money works. Explain to them why certain decisions are discarded.
You start by teaching them how to prioritise and optimise their choices. Teach them about investing from an early age. This will make them less gullible and understand money at a deeper level.
5 Way you can build wealth for your child
Tax Free Saving Account
Tax free savings accounts are a good to invest for your kids. You can open a TFSA in your kids name and set them up to a bright future.
The account is not taxed and you can invest up to 36 000 p.a and 500000 lifetime. It will take about 13 years to reach the lifetime limit if you start investing at birth. This means you will not have to worry about reaching the limit fast.
The further the investor is from retirement, the better it will be to invest in a tax-advantaged account. This means your kids will benefit more from a tax-free account than they would as adults.
To learn more about tax free savings account click here
Unit Trusts
Unit trusts are a simple and cost efficient way to invest in shares or other Financial instruments such as property and bonds. Unit trusts offer more financial return in a long run when compared to saving accounts that yield interest over time.
The best way to use unit trusts is to invest long term. More than five has. This way you can actually beat inflation.
You can increase or decrease your investments anytime. There's also a big pool of choices to choose from for your investment. A multi-asset fund offers long-term growth as it has variety of assets to invest in which makes it a good place to start.
You will be liable for capital gains tax when you disinvest.
Education Policies
Education policy is an endowment policy and mostly requires that you invest for at least five years and may mature after 10 or 15 years. Most of educational policies will require a lump sum investment or equal monthly payments.
The tax rate on these investments is high which makes them more suitable for high income earners. You may be taxed more in an endowment than you would in a unit trust or tax-free saving account (which is not taxed at all).
Fundisa Fund
A Fundisa Fund is an opportunity for medium investors from low income households to invest in their children's education
Credit card
Credit scores play a huge role in obtaining financing for your car or mortgage. It also has a direct impact on the interest rate you are charged.
A good credit score will lead to financial institutions trusting you and charging lower interest rates in comparison with someone who's in the same position as you but has lower credit score.
Note: A lot of other things factor in to interest charged but this comparison assumes all things are the same except the credit score.
You can use credit card to build wealth for your kids by opening a credit card in their name and use it to pay recurring subscriptions and like. You have to make sure you pay the credit card payment is on time.
This will increase your kids credit score and thus saving them from the hustle of trying to increase it when they're older and want to make big purchases.
The down side to this is that you can also ruin your kids credit score if you are not disciplined. You need to do this only when you have the financial discipline to not misuse a credit card. Otherwise, your kids are better left starting from zero than starting from a negative ten (-10).
Final Thoughts
Securing generational wealth for your kids is attainable. It requires discipline, sacrifice, strategy, and funds (we cannot ignore this big fact).