Best Ways To Teach Kids Financial Responsibility (Good Money Habits)

Ways To Teach Kids Financial Responsibility : Exploring in a Lego store

It’s heart-wrenching to tell your children that they can’t have this little pleasure because you cannot afford it.  The tendency of parents is to yield to their child’s whims for as long as they can afford them.  But, this sometimes means tightening the belt a little or skimping on some other expense.

It is not wrong to say, “no” once in a while.  In fact, even if you can afford these whims, it is recommended that you do not give in to your child’s every wish.  You’re not the fairy godmother or the genie in the lamp.  You need to make your children understand your financial status and in the process, they would learn the value of money. For a start, you should be able to show them that you are financially responsible. Save up, prioritize on needs, so you can reduce debts to enhance the family budget, you can learn more here on how to better your finances.

As kids are little sponges taking in knowledge, it’s better to start them early with money lessons, here are some ways to teach them how.

Ways To Teach Kids Financial Responsibility : Once in a while – candy store

Transparency

You do not have to hide financial hardships from your children, letting them realize that there are things you can and cannot afford.  Neither should you hide any wealth you have accumulated.  They need to understand that you have this much source of income which are being prudently managed to match your family’s financial needs.

The more important lesson for your child is not how much you have but how you are handling your family’s finances.  Those who have home safes overflowing with cash will not likely have much to live on several years down the road if they splurge on every family member’s unreasonable whims and desires.  It’s easier to spend money than to guarantee that you have money for emergency needs or any other future financial needs.

Teach Them To Use Money Wisely

When your children understand your family’s financial status, you can actually enlist their help in managing your finances.  No, you do not have to make them work for income.  You can give them their own role in your financial management. Here are some ways:

Ways To Teach Kids Financial Responsibility : Enjoying Gelato

Own Pocket Money

Kids having their own money, even just so they have enough to use when they get hungry, or when they need to pay for a taxi cab going home is something we’ve practiced since. Teaching them to use money for needs and emergencies will instill in them the need to prioritize, that there could be better uses for money at some point.

When our kids got a little older, we let them have their own ATM card. Others might frown upon this, but just so they do not have to be running around without money when  unexpected circumstances come.

So far, all three kids are able to save up some, and they were also able to spend on some things they like. Little things from orange drink, a cute keychain, character shirts, or earphones.

Giving them their own money might either make them spend too much, or make them see the benefits of waiting to have more before spending (impulse buy).

A Trip to the Grocery Store

You can perhaps give them a grocery budget for some needs and let them come up with their own grocery list. Let them compare prices when in the store. Make them see the differences of prices between generic and branded ones, explaining why sometimes one is better than the other.

Green Ideas

You can also let them monitor your electricity bill and think of ways on how you can save on your next bill.  You can even make use of colored bar charts to make things more interesting.  The lower they can get the bar, the better it is for your family.  You can give them a reward for all the savings they are able to generate from their energy saving ideas.

It is never a bad thing to cultivate green habits in children. Upcycling, reselling, and buying second hand items are also ways one can be greener and in the long run make one save money.

Ways To Teach Kids Financial Responsibility : bring them to buy  stuff at the grocery store

The Four Jar Method

Kids love to play, so use a method that is as though they’re playing. The Four Jar Method or Save, Spend, Donate, Invest scheme is simply putting aside money for these purposes. You can use jars labeled with each, or a container with compartment.

Save – money set aside for short term or long term

Saving teaches discipline, patience, and in some extent instant gratification. Saving stresses prioritizing needs before wants, being prepared for unseen occurrences, and even goal-setting.

Spend – what they can use to buy something they need

Wisely, spend wisely that is. Spending is somehow correlated to creating money. If they want to spend on something and their budget is lacking, they have to earn it or wait until they have saved enough.

Donate – becoming good citizens by helping out others, be it people or animals

God loves a cheerful giver (our little boy prefer “shareful”), says 2 Corinthians 9:7, and it also makes one happier (‘There is more happiness in giving than there is in receiving.” – Acts 20;35). How? Feelings of compassion and kindness leave less room for negative emotions. Giving gives you a sense of purpose.

Invest – putting money to good use which will they benefit from down the timeline

You can teach kids how money can grow, not on trees, but by investing. They’re probably too young to open account and do it themselves, but the bank is a good start. The money they saved can get interest after a span of years, insurance, and mutual funds have the same benefits. These kinds of money management become beneficial in later years.

Balance

Not giving in to your children’s whims does not mean that you are depriving them.  You are, in fact, preparing them for the reality that money does not grow on trees.  On the same note, if it’s just an occasional treat like a trip to the candy store every couple of months, there’s probably no harm in giving in.  In reality, you do need to reap the rewards of your hard work every once in a while.  Help each other “earn” it by saving up a candy fund from loose change dropped in a jar every day for a month or two.  Your treat will be more fun and rewarding this way.

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