Where are your children going to learn about money and financial responsibility? While they might get some instruction in school, most of the money lessons your kids get will come from you. Raising financially responsible children means teaching your kids the value of money from a young age and helping them learn how to spend it and how to save it.
Let Them Handle Money from a Young Age
The earlier you start teaching your kids about money and making financial decisions, the better. For one thing, children are more likely to listen to their parents when they are younger than when they are teenagers. For another, getting kids used to managing money at an early age means that you can be a model for them and can help shape their views on financial matters.
Teach Them Wants vs. Needs
One of the biggest money lessons kids can learn is the difference between something they want and something they need. Understanding that they don’t need to, and shouldn’t, buy everything they see is essential to teaching them to manage money wisely. According to CNN Money, children tend to be financially conservative once they understand the role money plays in getting them the things they want. You can help your children understand what a want is by only purchasing necessary objects for them, such as clothing and food. If your children want something, such as a toy or to see a new movie, let them know the cost of the object and help them figure out how much they will need to save, and for how long, before they can purchase it.
Remind Them That Patience Is a Virtue
Another part of raising financially responsible children is teaching them to wait before purchasing things that they want but don’t need. Sometimes, after waiting a day or week, a child will realize that he doesn’t particularly want the item, or something more interesting will catch his eye. One rule to live by is to wait at least 24 hours before purchasing an item that your child doesn’t absolutely need.
Once your children start earning an allowance or doing chores for cash, it’s a good idea to encourage them to set some of their money aside for a rainy day. Having kids save a portion of their allowance can teach them the basics of money management. Depending on how old they are, you might want to have them keep the money in a bank at home or open a savings account at a local bank. If they keep the savings at home, show them how interest works by paying them interest on the amount they save each month.
Set a Good Example
As a parent, it’s important to remember that you can’t tell your kids one thing but do another. Your children will model your behavior, so it’s essential to be an example for them. Use the 24-hour rule on yourself, and only buy “want” items after a set amount of time has passed. If possible, use cash when making purchases, so that your children don’t see you relying on debit or credit.
Don’t be shy about talking about money with your children. The sooner you teach them the basics of money management, the better able they’ll be to make responsible financial decisions when they’re older.
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Filed Under: Family
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