It seems that each generation has become less money savvy than the one before it. I think it’s very important for kids to learn how to manage money on their own and the sooner the better! Here are 8 tips on teaching your kids financial responsibility. I’m sure at least a couple of these can be taught to even very young children. I used ‘him’ in the following tips because it was much simpler than writing out ‘him/her’ each time.
8. Have Your Child Open a Bank Account
Bank accounts for minors are available as long as an adult is also listed on the account. Check with your bank to see what the minimum requirement is to open up a new account for your child. This will also give you an opportunity to explain and show your child what the purpose of a bank account is and why they are important to have.
7. Teach Him How to Balance a Checkbook
I learned how to balance a checkbook in sixth grade when my entire class was due to spend the day at a place called Exchange City. We learned the value of money, how it was necessary to keep track of how much we had in our checking account, and the importance of being able to add and subtract accurately. Making sure my checkbook and checking account are in sync is something I strive to achieve.
6. Let Him Get a Job
If your child is at the age that getting a job is an option, then allowing him to do so will help him to learn how to manage his own money first-hand. He’ll also have to learn how to manage his time with juggling school and a part-time job, as well as any social activities he might partake in. The check will be his and he’ll learn quickly that the more he does, the more he will be paid.
5. Make Him save His Own Money for Something He Truly Wants
Letting your child save up his own money for a special item will teach him to work towards something instead of having everything handed to him. When my son was 8, he began taking archery lessons and decided he would save his money to buy his own bow and arrows. We made a chart on the wall and wrote how much he needed at the top of the chart. A list of dollar amounts in one dollar increments were posted below this total. My son crossed off the amount of dollars he earned for doing chores around the house and for neighbors until he reached his goal. This process made the bow and arrows dearer to him, since he worked so hard to acquire them.
4. Teach Him How to Budget His Money
Whether your child has his own job or earns money from doing chores, teaching him how to create a budget will help him later on in life. Have him write out how much he makes each week, if known, and then make a list of things he plans on spending money on during the same week. This will help him to see if he actually has enough money to do everything he wants to do or if he must make a decision to eliminate something from this list of Wants.
3. Have Him Deposit 10 Percent of Each Paycheck into a Savings Account
For kids who have jobs, saving money isn’t usually high on the list. Teaching your child that saving at least 10 percent of each check will add up in the long run is a financial technique that will benefit them greatly later on in life. Your child may groan about it now, but I’m sure he will thank you some day for this little lesson.
2. Instruct Him on How to Resist Impulsive Purchases
Learning that it’s important to shop with a list and stick to it is something that most adults still have problems with. There are those pesky stands at the check-out counter that seem to draw the last bit of change right out of your pocket. A pack of gum, candy bar, or a stick of lip balm might seem like a necessity at that moment, but is it really? Impulse buying can become a nasty habit for some people.
1. Show Him What Can Happen when People Don't Have Financial Security
I’m not sure how else to word this tip. I know that not all homeless people were forced into that particular situation because they didn’t know how to manage their finances. However, showing your child an area of town where living conditions are less than desirable might open his eyes to what can possibly be avoided by being able to manage money wisely.
I’m not saying that you should tell your child that he can live in a multi-million dollar mansion if he learns how to save his money right now. Teaching kids how to save what they can and only spend what they absolutely need is the main goal. I think these 8 tips on teaching your kids financial responsibility should help you to achieve this goal with your child. What financial tips do you have to pass on?