Let's face it, our school will not teach our children about personal finances. Teaching skills to children at home is very important so that they can make wise financial decisions. One way you can do this is to take real examples from your personal finances and explain how they work for your child. Most parents have a mortgage loan and they must pay monthly. Show your child how these jobs become a good learning tool.
First, they must understand the relationship between interest and principle, and how this will affect monthly payments. I suggest demonstrating how mortgage loans work by showing some simple accounting tools, such as beans or other mortars, by showing the distribution between principal and interest for each payment. You can also prove how the principal affects the total interest payable. In addition, you can use it to show the actual impact that small changes in interest may have on the total amount payable. In this way, you can prove that reducing interest rates and avoiding high interest debts is very important.
There is an online calculator, and you can use them to show them some actual numbers, clearly showing this. You can then transfer it back to the family where they live and explain the benefits of home ownership in the lesson. In this way, they can link this simple financial lesson with their daily life, make it real, and therefore more memorable.
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Orignal From: Teaching children about mortgage loans
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