How To Raise A Financially Responsible Child
The need to raise a financially responsible child is obvious. Teaching them skills that will benefit them throughout their lifetime is the best gift any parent can offer. Apart from the practical implications of using, saving, and investing money wisely, such a kid grows old to become more responsible, confident, and better at avoiding debt in the future. Just like any other aspect of parenting, if you want to teach your children the golden rules of finance, model your behavior accordingly. Talk to them about all the financial lessons you have learned in your life. Talk about how comfortable you are with money.
Talk Money With Your Child
The cost of living is one aspect of finance every adult has to face sooner or later. Therefore, it is smart to chat about our monthly budgeting with kids. They need to know how adults manage budgets. The more we talk about things like paying monthly bills, spending on everyday essentials, and saving for retirement, the more they will get a basic understanding of the living cost, before they get to spend the hard-earned money on non-essentials.
This way, kids will gradually start developing an interest in family bills, expenditures, and budgets. What’s more, when they ask questions we answer them non-emotionally. So that they don’t get afraid of the finances or stressed out by money management before they are old enough to understand the terms.
Teaching kids to save money is important because you can’t have any money left at the bottom if you cannot save money on the top. Likewise, you can teach them the universal truth: that the value of money rests in the security it can provide, not how much stuff it can buy for you.
Value of Money and Values Around Money
When you start talking about the value of money and values around money, they gradually realize that money doesn’t go as far as they previously thought. For instance, teenage is a period in time when kids go through the most changes. This is a crucial juncture in their lifetime. They are starting to come into contact with the broader world whether it’s choosing a career, college, or relationships. Therefore, the realization that they may not enjoy the same standing of living, convenience, and lifestyle they currently enjoy and that they will have to support themselves soon, can be a real eye-opener for many kids.
This is the perfect time to make sure they know how to do basic things such as budgeting, managing bank accounts, savings, and debt. Spend some time with them to help them polish up their practical skills and basic knowledge. Teach them that money is great, money is awesome, but money is not God. It is a mere tool we employ to do many things.
Ways To Teach Kids Financial Responsibility
While there are several ways to teach financial responsibility to your children, we are listing down a few for your convenience.
First, take your kids along for everyday grocery shopping. While you are shopping, ask them about their input as you shop around and work the budget. If your kid is very young, do this when making decisions about smaller choices. As they grow old, slowly work your way up to bigger choices.
Second, give them some pocket money and ask them to manage their finances. Let them handle some cash as they navigate through their day-to-day affairs. This way, they will not only learn how to wisely use their money but also gain confidence while doing so. Don’t interfere in their decisions. Give them suggestions but allow them to make choices. It’s okay even if they start with the wrong ones. Nothing can beat a real-life lesson, right?
Third, train them about the popular Save, Spend, Give model. As adults, this is the most basic choice we make with each penny we earn. When your kids are young, have three transparent jars, labeled with each choice, and see how your children choose one. You can let older kids do this in bank accounts. Just make sure your kids are saving for a reason – such as buying a new toy from Amazon.
Fourth, match their savings. Explain why you are matching their money.
Fifth, educate them about the advantages of paying their bills on time. This is a golden rule. This is also an opportunity for you to talk about good credit, bad credit, credit history, and credit ratings. It’s a very vital lesson, especially for slightly older children.
Next, teach them about financial responsibility. That, they need to give back to the community. Whether it’s in the form of a donation to a particular cause or an organization working towards a cause, lessons in financial responsibility will help them become a responsible citizen.
Lastly, try to create an entrepreneurial spirit in your children. Working with small amounts will mean they will fail or lose in small ways. However, it will really help them understand how to apply these useful life lessons on a large scale when they grow up.
That’s pretty much it. Teaching kids to save money ensures they become financially responsible as they grow old. We hope you will try to incorporate these money lessons for kids in your lifestyle. Thank you for reading!