Do your children think money grows on trees? Here are some helpful tips on how to teach your child financial responsibility.
Use a clear jar to save
Piggy banks are a great idea, but it doesn’t give kids a visual. When you use a clear jar, they can watch their money grow. Yesterday they had a dollar bill and four quarters. Today, they have a dollar bill, four quarters, and three dimes! Talk with them as they save and make a big deal about it!
Be a good role model
As parents, you are considered to be your kids’ role models. Children learn by example, so if you’re teaching your kids how to save but you spend too much money on various things like clothes, cars, gadgets, and others, then you are sending a mixed signal to your kids. Try not to fall under the “Do as I say, not as I do” category. It is by actions, not words, that they learn how to handle money early on in their lives. So remember that whatever you do in life as parents will have a great impact on your kids’ future.
Use cash instead of cards
Try to use cash to pay for things as often as possible instead of using credit cards. Teaching the concept of “not spending money unless you have the cash to spend” is a precious lesson that many people wish they had learned earlier in life. If you are constantly handing over plastic to pay for things your child will be more likely to do this as well in the future.
Create a “chore chart”
Give commissions, not allowances. Don’t just give your children an allowance every week simply for breathing. Instead try setting up a chore chart with monetary rewards. Pay them for chores they do around the house like taking out the trash, mowing the yard, or doing dishes.
Once your child starts accumulating money for tasks, it is important to discuss needs versus wants, and the exchange of money for goods. Allow your child to pay for items at a store, by actually handing the money to a cashier in return for goods.
Give them the responsibility of a bank account
By the time your child is a teenager, you should be able to allow them more freedom with a simple bank account. Your teen will have independence in what they buy and how they spend their money. Using a checking account to handle their expenses is a good way to help them gain practical experience.
This is also a good age to start teaching them about paying bills. If you have a teen driver with a job, ensure they pay their portion of the car insurance. They can set up a bill pay to your account each month for the cost of the insurance.
Teaching your kids about money and financial planning is an important part of being a parent. The earlier you start, the better you’ll be able to prepare them for the future.