How To Raise A Financially Responsible Child
The upbringing of a financially stable child is golden in so many ways. In relation to that same obvious practical application of understanding how to use, Save and Invest money, consider the benefits of avoiding debt, personal responsibility and added trust.
It is a beautiful thing to help your child that way!
Like in all other areas of parenting, if you want to show your children something, the rule of thumb is to imitate the actions you expect them to know! How comfortable are you with your money? What kind of lessons have you learned?
101 Rule Talk Money with Your Child
Although I’m not actually endorsing handing off adult pressures on children (they have plenty of time for that later!), I think it’s wise to speak to our children about how we’re budgeting throughout the month. The more we think about issues like planning for retirement and paying bills before we spend all that money we earn on non-essentials, the more we have the chance to give our children a reasonable understanding of the costs of living
When our children express an interest in family bills, we need to answer their questions in a non-emotional way. We don’t want them to learn to be terrified of money or to fear money until they’re old enough to grasp it. Yet explaining something like this will help:
- First, we pay the bills – that involves investing, because we treat spending money as a bill.
- Then we buy groceries – since shopping expenses will flex up or down depending on how much money we have allocated.
- Then we’ll have to use what’s left for things like doing fun stuff – because fun stuff doesn’t actually have to cost anything.
It’s too simplistic – but for our children, this is a dialogue they can really appreciate. Unless you really want the money left at the bottom, you’ve got to invest the money at the top. And that the “interest” of money is in the protection that you and the people around you can enjoy. Not how many you can gain.
I’m always diligent never to put the burden of our family’s finances on my little shoulders. Yet if I’m relaxed and optimistic as I think about our family budget, my hope is that it will teach our children how to treat finances in the same realistic manner in the future.
I recall my father trying to teach me this lesson, when I was a child. He said that money is like a hammer …… just a tool. When you give a carpenter a hammer he is going to build a beautiful home. But when you give a child the same hammer and send him to the playground, you might run into a problem. This was the same blow, in any case. It took me some time to realize that … but my father, he’s a great guy.
Ways to Teach Kids Financial Responsibility
- Head out grocery shopping with your children. This is one of my favorites . Taking your children to the grocery store, and cooperating with their input on the budget.
- Give them real money. None of this beats experiences in real life. Get started with easy events and shopping trips. Let your children work with cash and count the difference. Not only do they know how to do it, but they still look and feel comfortable about it. An example: family holiday shopping. Set the number and see how it works. It’s all right to make suggestions, but let them make choices.
- Teach the model saving, giving money, investing. With every buck we earn, this is the fundamental option we all make. It should be done for savings accounts and budgets for older children. We like 3 clear, labeled jars for small children, in which each child can determine with the funds they receive and see the result. Ensure that all children are taught to save for a target – a particular toy or a car, teach them to save for a faraway purpose.
- Make sure you balance your investments and explain why and how you will do it. If you can afford so, consider matching your children’s money hard earned to save for education, sponsorship, car, etc … show them why you support their savings.
- Teach them how to pay bills on time and the benefits. It is a simple guidance. The exercise will offer a chance to talk about good credit and bad credit. To older children, this is a valuable lesson.
- Teach them to give financial support to an organization or cause. Sure, teach them the financial responsibility aspect that eventually comes.
- Develop and foster a young entrepreneur. Succeeding and struggling in small ways with money can help children learn how to apply such lessons on a larger scale.
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