3 Tips to Teach Children Financial Responsibility
Talking to your children about finances and making sure they learn healthy money habits can be challenging, especially when we are still learning about our own finances every day. You do not want to overshare or worry them with adult responsibilities, but you want to make sure they know enough to be able to make smart financial choices when the time comes. I have found that easiest way to teach kids these smart habits is to introduce it into their day-to-day life from an early age. Here are a few tips to get you started on the path to teaching your children financial responsibility:
1. Allowance
In order to understand the concept of money, your child is going to need something to work with. The most common way to introduce the idea of money and financial responsibility to your children is through an allowance — and that does not mean giving them free money every week. It is becoming more and more common for parents to reward children with an allowance after they work for it. Set up a chore chart for the house and have each task be worth a different monetary amount. Your child will be able to pick what house chores they want to complete, based on how much money they want to earn. This will teach your kids that money is something they are going to have to work for in life — it is not just handed to you — and can lead to a better work ethic in the future, because they know these two things go hand in hand.
2. Spend and Save
After starting an allowance, your child is going to want to spend their hard-earned money on anything in sight. This is where the importance of teaching a healthy balance between saving and spending comes in to play. Your child earned this money fair and square so it is only fair they get to spend it, but we must set boundaries and stress the importance of saving. There are a lot of different ways this can be done. Whether you only allow them to purchase three items a month, or you decide to designate a certain amount of the allowance to spending and the rest to savings, making sure your child knows the importance of saving is the first, huge step in being financially responsible. Plus, whether it is in a savings account or a piggy bank, your child will love watching that savings balance rise every time they get their allowance.
3. Lead by Example
Discussing finances can be uncomfortable and bringing kids into the mix does not make it any easier — but we have to lead by example and have these tough conversations. I am not saying you need to share every detail of your finances with your children; we do not want to cause them any extra stress than they already have at a young age, but it is okay to talk about and make financial decisions with and in front of them. Take going to the grocery to store, for example. As adults, we know to compare prices to find the best deal possible. The next time you go to the store, point this out to your children and explain why there are differences in prices. Whether it is something as small as making decisions in the grocery store, or having them listen in on your budgeting process, they learn from watching and listening to you. If you have smart, responsible, and healthy financial habits in place they are destined to understand what it takes to be financially responsible in the future.
Do not stress if you have not started having these tough, but important, conversations — there is still plenty of time. No one likes discussing their finances, and it might be tough bringing it up to your children, but it is your duty as a parent to make sure you are doing what you can to set your kids up for success. Starting at a young age by having them work for an allowance, stressing the balance between saving and spending, and leading by example will ensure they are on the right path to maintaining a healthy and responsible financial relationship in their future.
