Piggy Banks and Parenting: Teaching Your Children About Money

Salaam African Bank: Teaching Your Children About Money

Teaching Your Children About Money

Financial literacy is one of the most important skills every adult needs to know for a happy, healthy life. Considering how crucial money-smarts are for successfully navigating the world without being burdened with constant stress and worry, there is remarkably little support in place to help us pass this knowledge onto our children. Studies indicate that children’s money habits are established as young as seven years old, so you’ll want to make sure those habits are good ones. Here are a few ways that you can help equip your children with the money management tools they will need for the rest of their lives.

Be Open

One of the most important things you can do to teach your children about money is simply to talk to them, and be open about your financial situation. Many families treat money as an embarrassing secret. You might not want your child to brag or to feel inferior, but in the long run you are not doing them any favors by hiding your financial thoughts. Next time you have a serious conversation about money with your spouse, let the kids stay in the room. When they want an expensive new toy and it’s not in the budget, don’t give a fake reason but simply explain to them that you can’t afford it right now, or that they’ve already spent their toy allowance for the money. These little daily lessons help children to understand that money is a limited resource instead of viewing mom and dad as unlimited atms.

Give Kids a Starter Income

Instead of allowance, try a chores system where kids can earn money by doing work around the house — just like a job in the real world. They will learn that there are great rewards for hard work, and that they have the power to provide for what they want if they’re willing to work for it.

Let Them Make Mistakes

Learning to budget can be a difficult and frustrating process, as many adults know all too well. As when learning any new skill, children will make mistakes, and those are the best learning opportunities. The low-stakes world of allowances and treats is a perfect, safe way to learn about the disappointments and satisfactions of managing your money well. For instance, you might offer an allowance based on how much money you would usually be spending on toys and treats, and explain to kids that they will be able to earn their own money and use it however they want. Then, follow through by not buying them extras. If your child spends all their money right away and has none left over, that is an excellent learning opportunity. If you sweep in and give them more money or buy treats to make up the difference, they will lose out on a valuable opportunity to learn about consequences and budgeting.

Encourage Saving

If you child wants an expensive item, turn it into a teaching opportunity. Sit down together and set out goals, such as earning a the cost of an exciting and costly toy. Then, help you child form a plan to meet that goal. They may set aside half of their allowance money each week, or you may offer them extra chores to increase their earnings. Guide them as they save up their money and watch it grow before their eyes. When they reach their goal, take them to buy their prize and celebrate with them!

Investments Made Easy: A Simple Guide to Savings, Index, and Mutual Funds

Salaam African Bank: Investments Made Easy- A Simple Guide to Savings, Index, and Mutual Funds

Investments Made Easy- A Simple Guide to Savings, Index, and Mutual Funds

If you have any significant amount of money that you know you won’t need to spend for a few years, you likely want to invest that money so that it works for you to increase in value while you don’t need it. You also know, however, than investments are risky — you could win big and make money with very little work, or you could lose your initial investment just as easily. Investing can be extremely complicated, and most of us don’t have the time or the inclination to study the market and carefully manage an investment. Luckily, you don’t have to. Here is a basic breakdown of the three main choices when it comes to investing your money without managing your own stocks.

Savings Accounts

Although not typically viewed as an investment, a good savings account meets all the criteria. When you don’t need to spend your money right away, you can put it in an account and essentially lend it to the bank in exchange for a higher profit margin. Over time, you will turn a modest profit. Savings accounts tend to be some of the lowest yielding investments, but they are extremely safe. You do not stand to lose your initial investment, and you can also access your money and make withdrawals at any time and with little to no notice. The balance does not, however, increase to match inflation.

If you don’t need the advantage of liquidity and won’t need to withdraw your money for some time, you can opt for a Certificate of Deposit, which offers the same safety along with higher profit margins in exchange for restricted access to your money for a set period of time.

Index Funds

If you want a higher return on your investment and to keep pace with inflation, you must also accept the higher level of risk that comes with buying stocks, or shares in ownership of a company. Linking your financial future to the market value of one or several specific companies is the most volatile option, and may result in both great gain and great loss.

You can, however, invest in stocks for a more modest return and much less risk with an Index Fund. And Index Fund spreads your investment out across the entire market by buying a representative sample of stocks. This means that if any one company does poorly, your own investment will not go down with it. Your returns will be tied to the overall health of the market, which almost always increases over long enough periods of time.

Actively Managed Mutual Funds

Actively managed Mutual Funds are Index Funds that are carefully curated and overseen by an expert who actively chooses which stocks make up your fund at any given time and makes trades according to their best predictions of the market. The goal is to outperform the market, resulting in higher gains for their investors. Of course, there can be no guarantee that these goals will be met, and even the experts are sometimes wrong, resulting in higher losses. Because the funds are actively managed, they also charge larger fees.

5 Reasons You Need a Credit Card Today

Salaam African Bank: 5 Reasons You Need a Credit Card Today

5 Reasons You Need a Credit Card Today

Everyone manages their money differently, and the modern bank should allow you the freedom of many options when it comes to personal finance. There are some excellent tools, however, that should be part of almost every personal finance plan. Credit cards are one useful, versatile piece of most responsible plans, and can offer many advantages even if they aren’t your go-to for every purchase.

Convenience

The most obvious reason to carry a credit card is convenience. They are faster to use at the check-out counter and only require you to carry one item rather than assorted bills and heavy coins. Most importantly, credit cards give you the freedom to buy what you need when you need it, even if you don’t have access to the money until later on.

Emergencies

There’s nothing worse than being caught unprepared in an emergency. Whether it’s an unexpected medical bill, housing or car repairs, or even getting lost in an unfamiliar place, there are bound to be moments in all of our lives where we need some immediately available funds to help us out of a scrape. At that moment, it is extremely wise to have a credit card on hand to get you through the emergency.

Protection

Credit cards are a considerably safer way to carry your money with you than cash. If you wallet is stolen, you won’t lose any money that you can’t get back! A quick call to your bank can freeze or cancel the card and replace it without any trouble or loss to you. If somehow your card information is stolen and fraudulent charges are placed on your account, your bank will help you fix the situation and protect your savings. In most cases, you will be entirely protected from the theft and not held responsible for the theft, a luxury which you could never achieve if your cash was stolen.

Easy Records

If you use a credit card for most of your purchases, recording your finances is a breeze. You bank will keep an automatic list of all charges placed on your card and who you paid. Gone are the days of saving giant wads of receipts and sifting through complicated lists to keep track of your finances or build a budget.

Building Credit

Building good credit is easy when all it takes is using your card for your day to day shopping. It makes great sense for the purchases you are already making to work for you and help build strong credit that will save you money in the future. Thanks to the smart use of a credit card, you could save with better rates on mortgages, insurance, and other big ticket items like asset financing.
SALAAM African Bank offers great deals for credit cards that can help make your finances and your life go more smoothly. See our offers and decide for yourself!