How to Teach Your Child About Financial Responsibility

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Teaching your children about financial responsibility at a young age can help instill values and knowledge that will last them a lifetime, and it’s a great way to prepare them for the real world. Even if your children are old enough to have learned about how money works, school will likely not teach them about how to save, how to spend wisely, or why a budget is so important. These are skills you can develop in your children with some hands-on teaching.

Think about what you want to teach your children, and make the lessons fun. For instance, you might encourage your children to set up a lemonade stand with a friend, or buy a piggy bank with a built-in money counter that will help them keep track of their savings.

Here are a few of the best tips on how to teach your child to be financially responsible.

Be consistent

Teaching young people about the importance of being responsible with money is difficult if you aren’t consistent with things such as giving allowance for chores. Some parents don’t believe in paying children to help out around the house, while others feel it’s a great way to help them learn about earning and saving. If you do decide to let your children earn an allowance, stick with it for a while to help them learn the right way to handle their finances.

Work from home

If your schedule will allow it, consider getting a part-time job from home so you can share everything about your job with your children. A great example is working for a dog-walking company, which would allow you to make some extra cash while you teach your children about the importance of being responsible, how to budget both money and time for the week, and what to do with the money you earn. Just be careful not to let your children take over the dog-walking duties; this is about what you can teach them.

Use gifts as teachable moments

Many kids receive cash for birthdays and holidays, so it’s a good idea to show them how to take a portion of it to put away in savings. It might even be the right time to open up a bank account just for your children so you can help them start saving. For older kids, you can strike a deal to match dollar for dollar what they put in up to a certain amount, as long as they keep their grades up and agree to some rules about withdrawals.

Teach your child to shop smart

Teach your children how to shop without overspending by talking about what they want to buy, creating a budget, and comparison shopping online before going to the store to make sure you get the best deal. By showing your kids how to be smart about their spending, they’ll learn that impulse buying can be hard on a budget.

Talk about “needs” and “wants”

It’s important for your kids to learn the difference between what they need and what they want, so include a lesson on the basic human needs and why they are so important. Emphasize that clothing, shelter, food and water, sleep, and family are the most important things in a person’s life, while toys and video games are merely for entertainment.

Talking to young people about money can be a big responsibility, and it’s often difficult for parents to know where to begin. Start off slow and easy and use as many real-life situations as you can to show your children how to be savvy financial planners so they’ll retain these lessons for a lifetime.

 

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