Day #4 Teaching Your Child about Money

Financial obligations are a commitment and it's important to drive this point home to your children. Mother of four, Alicia Vargo, could not have driven this point home even better with her four children (ages 16, 17, 19 and 21).

"I have always made certain that if anything were to ever happen to me that they would know how to take care of themselves. Examples of this are each one of them saved for their cars, we matched down payments, but we put the cars mainly in their names so they could build their credit, pay their car payments and their insurance," says Alicia.

Alicia and her husband have downsized significantly in their "things" as an example for the kids in being financially responsible while maintaining quality of life. Alicia and her husband have tried to teach their children not live for their mortgages, but rather to purchase a home they can afford to pay for each month. Circumstances in life can and do change quickly, so teach your child to have a realistic view of what quality of life means and that bigger isn't always better.

Alicia's daughters are 19 and 21 and already have a substantial and positive credit history, strong savings accounts, and can rent an apartment or house on their credit alone.

Alicia states, "We have taught them how to pay their bills and build their credit."

It just goes to show that no matter what age you start, it's imperative to teach your children that when they use a credit card, take out a car loan or use a mortgage to buy a home that they are responsible for making the payments--each and every month--so they need to make wise purchase decisions and buy what they can afford to pay for.