Gregg Murset is a groundbreaking inventor, father of six, certified financial planner and consultant who is a major advocate for sound parenting, child accountability and financial literacy. He was named Financial Educator of the Year in 2017 and is featured in hundreds of media stories each year promoting improved financial literacy in schools.
According to a recent LendingTree survey, Gen Z and millennials are putting off major life events such as getting married and parenthood until they can afford to purchase a home. The survey respondents also said they think it will take at least until 2027 for them to be able to afford purchasing a home. The reality is, factors such as inflation,rising home prices and mortgage rates, lack of savings, low credit scores, other debt obligations, and a lack of financial knowledge, could make the dream of owning a home out of reach for many young adults.
While current economic factors are partly to blame for Gen Z and millennials not being able to achieve the American Dream, so are generations of poor financial decisions and a lack of financial education. While parents are supposed to give their children the knowledge and ability they need to find their way through life and be able to achieve milestones such as buying their first house, it can be hard to do if they never learned critical financial skills themselves outside of trial and error.
This does not mean that children are completely out of luck. Some states are beginning to require personal finance coursework in high school, but parents will need to fill in the gaps, especially in states with minimal or no educational requirements.
Here’s how to do it:
Teach Kids While They are Young about Financial Literacy: Some schools require teenagers to take one semester of financial literacy to graduate. Although it seems like a good thing, it just simply isn’t enough to remember anything or learn everything there is for their adult lives. By teaching kids’ financial basics, such as budgeting, saving, and investing from a young age, parents can lay the groundwork for responsible homeownership. Parents can encourage children to set a savings goal and contribute to it regularly when they’re young. As they get older, up the ante a bit by involving kids in household finances and decision-making processes. By discussing things like monthly household bills and managing a budget throughout childhood, parents can open their children’s eyes to the real costs of “adulting” so they aren’t shocked when they move out and have to be responsible for their own bills.
Encourage Responsibility: Many teens today are not getting their first job while they are in high school. More time is being spent on sports, academics, and other interests. This means they’re missing out on valuable life lessons like being accountable to show up to shifts on time, and seeing taxes taken out of their paycheck (which teaches us all very quickly just how far $20 an hour doesn’t go). Parents can provide a similar “first job” experience at home by assigning age-appropriate household chores to kids, such as cleaning, small repairs, lawn mowing, etc., and paying them for their work. For a real dose of reality, parents can a chore salary with kids and then reduce that amount by a percentage so kids can start to grasp the concept of taxes as well.
Set Financial Goals: Encourage kids to set financial goals. Help them create a plan to achieve these goals, breaking down larger objectives into smaller, manageable steps. By setting clear objectives and tracking progress, kids learn the importance of discipline and perseverance in working toward what they want. This can help lay the groundwork of financial responsibility so in the future when all their friends are posting about a European vacation or a new luxury vehicle, they have the willpower to stay on track and keep setting aside money each month toward a down payment.
Invest for the Future: When teens start begging for a new car as their 16th birthday approaches help them save to buy a home without them even knowing it. According to Bank rate, the average monthly payment for a new car today is about $700. Even a used car is going to cost about $533 if the vehicle purchase is being financed. Instead of throwing away money on interest, buy a more affordable used car outright and use a portion of the money (or all of it if you can afford it) that would have gone toward the car payment to invest. If a teen started putting $400 a month into an investment account starting at age 16, he/she could have almost $122,000 by the age of 30. Plenty of money for a healthy down payment on a home!
Understanding Homeownership: Children should know that buying a home will be the biggest purchase they will make in their lifetime. A house is more than simply a place to live; it’s a place where they will make memories and establish a life for themselves. But before any fun or memories; they need to understand the process and all the associated expenses such as the mortgage, property taxes, monthly bills and repair costs, and homeowners’ insurance. This is the no so fun part of owning a home. For parents who aren’t sure where to start or who never owned a home of their own, there are free resources that can help including meeting with a loan officer at a local bank for an informational conversation about the process of saving for and purchasing a home.
Educate on Real Estate: Most kids are not going to sit down with their parents and chat about 30-year rates over dinner. And many parents might not understand all of the nuances of the mortgage industry or real estate investment. But they can spark an interest in kids just by turning on the television. HGTV and other networks or streaming platforms offer a variety of shows where first-time and seasoned homeowners as well as real estate investors experience the trials and tribulations of owning property. Kids won’t learn all the behind-the-scenes details, but this simple type of exposure can help plant the seeds and open their eyes to how difficult it can be to buy a home.
Search Housing Options: Exposure to various housing options broadens kids’ perspectives on homeownership. Visit different types of homes, from apartments and townhouses to single-family houses, discussing the pros and cons of each. Encourage them to envision their ideal living space and consider factors like location, amenities, and future needs when evaluating housing options that can affect the cost. This also helps them learn how to weigh the pros and cons of certain houses when it comes time for them to choose their first house.
Don’t Need to call “a guy” for Everything: Basic DIY skills are helpful for homeowners, enabling them to tackle minor repairs and maintenance tasks independently. Teach kids practical skills like painting, basic plumbing, and simple carpentry projects. Engage them in hands-on activities that spark creativity and teach problem-solving abilities, preparing them to handle household projects with confidence in the future. By teaching them simple home ownership basics, they won’t have to dig into their savings to hire a plumber to unplug a clogged drain that they could have done with a snake. Since kids often don’t want to listen to parental advice, make sure that some of their chores involve home maintenance tasks as well. And if they aren’t sure how to accomplish those tasks but don’t want to listen to mom and dad, have them turn to YouTube or TikTok and watch online tutorials to learn these priceless skills. Something as simple as knowing how to edge and mow a lawn could add up to close to a thousand dollars or more in savings each year when they have their own home in the future.
Conclusion: When preparing kids for homeownership, it is more than just teaching them about mortgages and property taxes – it is important to teach them about smart spending habits, making sure they have financial literacy, and understand the value of long-term planning. By starting early and integrating sound financial practices into their everyday lives, children will be ready to buy their first home when the time comes. As a bonus, they’ll be able to understand the investment potential to generate wealth.
About Murset and BusyKid
BusyKid helps children develop a healthy financial routine they can carry into adulthood. With the help of parents, children use BusyKid to get the hands-on experience in making various money decisions, including how much to save, share, spend and invest. With pre-loaded chores and allowance based on children’s ages, parents can easily set up any kid account, and in minutes, and kids can be earning money. Payday is each Friday after parents check the work to verify that it was completed and approve a notification on the phone to ok the transfer of funds. After getting paid, children can save some money, donate some and use the rest to get cash or learn how to invest in real stock. Every child also has a personal debit card to use while parents can follow all transactions. BusyKid is available via Apple Store and Google Play. For more information about BusyKid, visit http://www.busykid.com.
