If you have kids, you know that they're generally more interested in spending money than earning it. While it can be tempting as a parent to give in to your child's wants, it's important to help them understand the true value of money. By teaching your children some basic concepts associated with money, credit and debt, you are helping prepare them to become independent, financially responsible adults.
Family Budgeting
You can begin teaching kids financial responsibility by making budgeting a family event. Begin by explaining the basics of how budgeting works. You make X amount of money and have X amount of bills to pay. You don't need to break down every penny of your income and spending, but you can provide examples of expenses they can relate to. For example, if your child has a cell phone, ABC News suggests going over the bill with her monthly so she can get an idea of what it actually costs.
Allowances
Allowances are one of the most common ways parents try to teach kids about money. Depending on your personal beliefs, you may give kids an allowance in exchange for doing certain chores, making good grades or good behavior. Kiplinger Magazine recommends starting kids on a weekly allowance once they start school. The amount should be based on what the child is expected to buy. For example, older kids will need a larger allowance if they're expected to purchase their own clothes or school supplies.
Saving Money
Once you've established a regular allowance system, you should teach children the value of saving. Smaller children can start saving in their own personal piggy bank. Together, determine how much of their allowance they can save and spend each week. As they become older, you can set up savings accounts in your children's names. Family Circle recommends goal-setting as the best way to get kids interested in saving. You may also implement a matching program to help them maximize their efforts at saving.
Credit and Debt
If you have teenagers, it's important to teach them some basics about credit and debt. While the federal government has taken steps to regulate credit card marketing aimed at college students, young adults still are among the primary targets. You can teach your teens about the basics of what makes up a credit score, how interest rates work, the dangers of overspending and how much items purchased on credit can actually end up costing.
Giving Back
Lastly, financial responsibility means giving back. Giving back can help your child to develop a sense of charity and to value what they have. You can teach kids to give back by having them donate a certain percentage of their allowance to charity or to your church or by volunteering in your community.
References
- ABC News: Teaching Kids Financial Responsiblity
- "SUCCESS" Magazine: How to Teach Your Kids About Money
- "Family Circle" Magazine: Teach Your Teens Financial Responsibility
- U.S. Department of Health and Human Services Family Guide: Teaching Kids How to Manage Money
- "Kiplinger" Magazine: Teach Kids the Value of Money
