Financial responsibility is a valuable lesson that kids of all ages should be able to understand. Unfortunately, most kids tend to be more interested in spending money than learning how to earn and save it. It's important for parents to teach their kids the basics when it comes to money, including how to pay bills, use credit and handle debt.
In doing so, you're helping prepare them to become independent, financially responsible adults. When teaching kids about money and personal finance, there are several key concepts that it's important to make sure they understand.
Teach Children About Budgeting
Understanding how to budget money is the basic first step in learning financial responsibility. You can help your kids to understand how a budget works by making budgeting a family event. Sit down with your kids once a week or once a month and walk them through the basics of your budget. You don't have to go into explicit detail about your income or bills but you should be able to demonstrate to kids the basics of when you get paid, what your bills are and how they're paid.
Kids and Making Money
In order for kids to have a sense of financial independence, it's important that they be able to earn their own money. The most common way for kids to earn an income is by getting an allowance in exchange for performing certain chores or tasks at home.
If you have older kids, you may encourage them to look for a part-time job to help them generate income. For kids who aren't yet old enough to work, consider helping them generate their own money-making ideas, for example, starting a dog-walking or car-washing business.
Encourage Children to Save
Whether your kids get an allowance each week or they're working regularly to earn their own money, they should be saving at least some of their income. Teaching children how to save money in order to buy the things they want helps them to understand the value of every dollar they earn. Sit down with your children and help them to establish a plan for their savings along with their goals. Help them to chart their progress regularly so they can see how their savings add up over time.
Teach Teens About Credit and Debt
If you have older kids, it's important to teach them some basic concepts about credit and debt. College-age students are one of the primary targets for credit card marketing and a number of college students fall victim to teaser offers, which can quickly lead to credit card trouble. It's important that your kids understand how credit cards work, how credit scores are calculated and their impact and the dangers of falling into the debt trap.
Giving Back to Community
Perhaps one of the most important financial lessons you can teach your kids is the value of giving back. In doing so, you're helping your children to develop a sense of responsibility to society as a whole as well as a deeper appreciation for what they have in life. It's important that your children understand that giving back can be done not only financially but through a commitment of their time and service as well.
As a parent, you can't afford not to teach your children these basic money lessons. Giving your children an education in finance at an early age is a key building block to ensuring their successful transition from dependent child to independent adult. By taking the initiative to educate your child in the basics of finance, you're providing them with necessary tools to successfully manage their own financial future.
Rebecca Lake - R.L. Lake is a freelance writer and virtual assistant living in the southeast. In addition to writing for Suite101, she writes content for ...
