Financial responsibility isn’t something most people are born with. Your spending habits are probably the result of how your parents managed money and what they taught you about it. And your child is no different. So, it’s important to start teaching your child how the financial world works as soon as possible, perhaps as soon as they grow comfortable with counting. Here are three tips for raising financially responsible kids.
1. Go Comparison Shopping
One of the simplest ways to raise financially responsible kids is by bringing them with you when you go to the store. In their younger years, you can start by explaining that everything in the store comes at a price. Try showing them price tags and then an equivalent amount of physical cash.
As they grow older, you can teach them how to comparison shop. The best place to do that is at the grocery store. Have your child find the lowest price for any given item. Make sure to explain the importance of unit pricing and quality versus quantity. Explain to your child why you might choose a certain brand.
2. Give Your Child a Sensible Allowance
Another common method for having financially responsible kids is by giving them an allowance. Let your child decide what they would like to spend it on. Every family has their own method for allowance distribution. But the method itself doesn’t matter.
What matters is that your child has the opportunity to decide what they will spend their money on. If they want to purchase something that you know is a waste of money, gently remind them how much housework they had to do to get the amount of money the item costs.
3. Let Your Child Bank on It
It is important to familiarize your child with banks as soon as you feel they are ready. Start with a savings account. Make sure to bring your child with you when you open the account. Smaller, more community-oriented banks are more likely to have tellers who can explain banking to young minds.
As your child grows, continue to feed them knowledge about the different aspects of banking. Explain things like interest rates, fees, debit, credit and balancing a checkbook. By having a bank account, you can easily raise a financially responsible kid who is proud of their accomplishments.
By following these tips and reinforcing positive spending and saving habits, you will end up with a financially responsible kid who is ready to enter the real world before you’re even ready to let them go.