How to Teach Your Kids Financial Responsibility
It is a great habit to teach kids financial responsibility early because it is much easier to instill a certain culture while they are still impressionable. Hopefully, they will live with this new attitude through the years.
Discuss money matters
One of the best tips in endowing financial responsibility on your children is to actually discuss money matters with them in a responsible manner. Too many families never discuss money matters at all and therefore there isn’t care about it.
Just like adults need to budget money so should kids. Budgeting carefully teaches children to allocate money accordingly and responsibly. The children should have a detailed budget that shows them their income and expenditure on a weekly basis so they can prioritize and improve their budgeting skills by accounting for unnecessary expenditure thus cutting down outgoings and increasing the amount they save.
Give them some financial experience early. It could be asking them to do some shopping for the home. This will increase their ability to be more prudent with money as they gain experience of handling money. You could set them an objective by creating a shopping list that they have to purchase without going over a certain threshold in terms of how much they are allowed to spend on it. Initially, they might make a few mistakes but as they gain experience their ability and inclination to make better purchases will improve.
A great way to teach kids financial responsibility is to tell them to avoid impulse purchases. These are purchases that often happen in the scope of the moment and there is little thought that going behind it. These are often unnecessary purchases and sometimes a total waste of money.
One of the key characteristics of being shrewd with money is the propensity to save. By opening a savings account for a child, it will improve their determination to be responsible with money because it will encourage them to save up and stack the money away in their account
There are plenty of banks that offer high interest accounts for children. Teach them how interest works and the money swells through compound interest. This will increase their appetite to be responsible with money and save.
Teach them not to be obsessive about the need to have every new product that aimed at their age group. Of course, a child should be able to enjoy him/herself and experience the fun of growing up and, occasional presents are welcome, but there is no need to have every product that comes out.
Working Young kids could do small chores to earn a bit of extra money either at home or for neighbors. For slightly older kids – as long as they have reached a working age should seek a part time job. This money should be budgeted properly so some, if not most of it, can be saved.
This should not be too many hours because it could be detrimental to their education and social life.
The value of sharing A great way to become responsible with money is for children to be taught to share with their siblings and friends. This encourages them to be more resourceful with and less wasteful.