Children often don’t understand the value of money until it’s time to earn it. But the earlier they do, the faster they’ll be able to have a sense of financial responsibility and appreciate the value of work. Teaching them about a concept that may seem so abstract to them can be a challenge, however with the right tools, you’ll be able to raise financially responsible children who know how to make sound financial decisions. Here’s how you can teach your kids about financial responsibility.
Teach them How to Build a Budget
Giving your child an allowance could be a tool you can use to teach them how to manage money. You could start by giving them a weekly allowance when they’re younger, a biweekly appliance once they’re preteens, and a monthly allowance when they’re teenagers. Younger children might have more trouble managing a monthly allowance, but spreading payments out as they get older will allow them to become gradually better at managing money.
Make them Earn their Allowance
You also have to make sure that they have clear tasks they have to accomplish to get their allowance. This will teach them the importance of work. You also want to have them participate in purchases as well. If they want a new toy or a cool backpack, tell them that you’ll pay up to a certain amount, and they have to pay the rest. This way, they will understand that they, as well as mommy and daddy, have to work for the things they want.
Teach them how to be Responsible Shoppers
You also want to teach them how to be smart and responsible shoppers. This is especially important for teens who might have a job. You have to teach them how to buy items in bulk when possible and learn some basic couponing tips. You also need to teach them how to use review sites. There are many sites with various product and service reviews you can choose from, and you have to teach them how to read these reviews objectively.
You should also show them the value of doing things for themselves, and how much money they could save that way. The best thing you could do is teach them how to cook and show them how much margins restaurants are making. Once they learn how to make their own pizza or three-course dinner, they won’t be so fast to pay for an overpriced meal they could easily do better at home.
Let them Start a Business
There are tons of business models accessible to young children and teens. For instance, some children are now earning money reviewing toys or building their own online shops. You could also encourage them to partner up with you, and show them how a business is managed. Sparking the entrepreneurial spirit early will allow them to be financially independent, and maybe even foster an interest in studying business once they get older.
Be an Example
This is probably the most important tip. If you’re constantly slapping plastic for every single purchase you make, they will notice. A Cambridge University study found that children’s opinions about money are fully formed by the age of 7. So, always remember that they’re watching, and teach by example. If anything else, let them see how you manage your accounts and teach them early about the importance of having strong credit.
These are only some of the ways that you can teach your children how to be financially responsible. Starting early will allow them to grow into financially smart adults who learn to appreciate the hard work you do as a parent.