How To Teach Your Children Financial Responsibility and Management
Once your child begins to ask for things at the store, or things they see on television, it’s time to start teaching them about money. They need to understand first and foremost that money needs to be earned, and there is no entitlement in life. Forming good money habits in children is the best way to ensure they will become financially responsible adults, and there are many ways to begin to instilling the value of a dollar in your children.
Don’t Just Give Them What They Want
If a child knows that they can whine and cry to get what they want, it will be very difficult for them to understand otherwise. They then see toys and material items as things they are entitled to, that they deserve to have just because they want them, and this is destructive to their sense of the value of money. Show them that they need to earn the things they want, that they don’t just get them by complaining they don’t have it.
Give Them An Allowance, and Have Them Spend Their Own Money
It’s much easier to spend other people’s money, as it doesn’t feel like a loss. If a child has a weekly allowance that they earn by doing chores around the house, helping out their brothers and sisters, or from showing other acts of advancing responsibility, then they have their own money to spend and save. Don’t use their grades as a means to give them more or less money, as sometimes all the time and effort in the world won’t get them an A, but base it on their hard work and dedication.
Invest In a Modern Piggybank
Piggybanks that hide their contents from children are a little dated. Nowadays, there are many options from online piggybanks, to see-through piggybanks that separate the money into different categories, such as saving, spending, donating and investing. This way, not only can the child see how much money they’ve accrued, they learn that money is not just collected to buy things, but is used for many different things, like sharing and security.
Make Them Create a Budget
This is something that can be developed over time. Each week or month, guide them in counting their money and deciding how much is going to be used for toys, candy, saving, and gifts. As they get older, things like clothing, Starbucks, and going to the movies can be thrown into the mix. They constantly learn how to properly portion their expenditures, and won’t feel overwhelmed by the money they can and cannot spend.
Be An Example
Children learn best by example. If children see their parents constantly putting luxury items on credit cards and neglecting essentials, they will begin to think that’s an acceptable way to treat finances. Having your own budget and sticking to it, living inside your means, and always maintaining a good balance between spending and saving will show them the proper way to take care of money, and will apply that to their lives.
Melisa Cammack is the mother of three children, and a business owner, so finding the right way to educate her children on money came pretty naturally.
Melisa is currently writing on behalf of Credit Card Column, for those looking for more information on credit cards, and what credit card best suits their needs.