Ok parents; how often are we looking for reasons to tell our kids why it is so important to study hard in school?
Well, here’s another good one. A recent study implies that if you are unable to do basic math, you could very well lose your home one day.
The report focuses on several hundred mortgage borrowers and found that those scoring low in math ended up defaulting on their mortgage payments.
One day, when our kids are closing on that first home, they might appreciate the fact that we insisted they practice their math skills.
But for now, let’s start opening the door to the housing market by teaching them some basics.
Here are three tips for teaching kids about real estate.
1. I promise I’ll pay you back! – My son thinks we should sell our home for $100 and when we drive around looking at homes on the market, he throws out dollar figures of how much we should pay for them; none of which are realistic. Still, it does give my husband and me an opportunity to start emphasizing that real estate is often very pricey. And guess what kids? If you work hard and save your money, a bank might very well like you and lend you the money to pay for your home. However, you are responsible for giving that money back to the bank. In other words, start explaining the basics of a mortgage. Older kids may grasp the concept of a mortgage rate. Bankrate.com is a good resource for better understanding mortgages.
2. Bubbles will burst – The housing market certainly has its share of ups and downs. Just like a seesaw. There are times when there is great demand for homes and people are willing to pay more money to get what they want. During these times, prices will continue to grow and grow, just like a bubble. But eventually, what goes up, must come down. This leads to a period when there is less demand to buy homes, prices fall, and yes, the big money bubble pops. By using the images of a seesaw and giant bubble, we can slowly begin introducing the concept of supply and demand.
3. Build it, and they will come – Kids like to build and so do many adults when it comes to their homes. Typically, when homeowners are excited, they will spend more money to make their homes even better. What investors typically find is that there is a relationship between home improvement companies and the strength of the housing market. If more people are buying homes or renovating, these companies will often see a rise in sales. Many of our kids will not only be homeowners one day, but also investors looking to better understand corporate America. This is a simple explanation of how the success of some of the most well-known companies is often tied to other circumstances.
Finally, I want to hear from you! Let me know of some other topics we can explore together to help raise financially responsible kids. Email me at momknowsmoney@lohud.com.
The post Mom Knows Money: Three tips for teaching kids about real estate appeared first on Tax Watch.