Whether you have teens or younger ones, they must know how money works. Being responsible with money is something parents should teach their children. This is why many are pushing for financial literacy to be part of the school curriculum. It’s urgently needed since the lack of financial literacy causes people to make bad financial decisions. This is the reason why people don’t have enough retirement savings. The lack of financial literacy also makes people ignore sparing for emergency funds.
With all these in mind, you should know that you have to guide your kids regarding finances. You don’t want them to end up spending their money irresponsibly. So you have to start teaching them about financial responsibility as soon as possible. Start them young so they can learn a lot.
If you’re not sure how to do this, we got you. Here are lessons you can teach your children to make them financially responsible.
Saving money is probably one essential thing you can teach your children. That’s in general, not only in financial responsibility. Teach them the importance of savings by having them save money. Bring them to the bank and open a savings account for them. You can talk to your banker about any junior savings your bank offers. Teach them how the savings account works and let them do the bank transactions with your guide.
Make saving money fun for them by celebrating every dollar they put on their account. By the time your child turns 18, they already know how convenient it is to have savings. They’ll have peace of mind knowing that they have money to use in case of an emergency.
Explain Them Your Bills
For sure, you have several utility bills in your hands. Try involving your children in analyzing these bills. You can show them how you’re budgeting your salary to pay for these bills. If it’s not too much for their comprehension, show them the complexity of bills.
You can tell them why a particular bill is higher than the previous month. Or perhaps, how your mortgage loan rates are lower than their grandparents’. This will teach them to understand how a bill is calculated before paying for it. That teaches them to spot discrepancies so disputes can be raised if needed.
Bring Them to the Grocery
This can be a fun activity day for them. Not only can they do the chore with you, but it’s also going to be a perfect time to teach them about budgeting. By bringing them to the grocery, you can make them compare prices. Not just that, you can also teach them what other things to consider when buying goods aside from the price.
Teach them about quantity, so they know which product they can truly get more from but pay less. This can train your children to be keener when it comes to buying. It’s going to make them a lot more observant and budget-conscious.
Practice Reward System
Giving children rewards for doing something good is a method that has been deemed controversial. But it seems like people are highly misinterpreting the studies about it. Doing a reward system can make your children do good deeds. It’ll instill in their minds that there will be something rewarding in return if they do good things.
On the other hand, this can also be an excellent educational method for financial responsibility. Rewards can represent the perks you get when you pay your credit card bills on time. They can also mean rebates when you dispute something that isn’t right in your restaurant bill.
Simply giving them rewards once they reach their savings goal can teach them about growing their money. That’s going to provide them with lessons about investments. A reward system is a useful method to teach your children about financial matters.
Describe the Concept of Salary
Your children should know how and where you’re getting your money from. Start explaining to them about your salary. Let them know your hourly rate and how your company computes your wage daily, weekly, and annually. This way, they see the value of money you’re using to bring food to the table and to keep the electricity running.
This can give them a sense of responsibility to avoid wasting things you continuously pay for with your salary. It can teach them that work matters. Otherwise, they won’t be able to enjoy all the things they’re enjoying now. Give them a little preview of what’s to come for them. When they grow older, give them tasks. Give them a little “salary” if they finished the chores properly. That’ll make them realize that you need to work to earn a living.
Money management isn’t only for adults. It’s better if you can teach your children about finances while they’re young. You might choose to let them learn about it later in life, but it’s risky. So make it a point to start them young.
Meta title: A Guide To Parents on Teaching Their Children About Finances
meta desc: It’s crucial for people to be financially literate. That’s why it’s better if you could teach your children about financial responsibility while they’re young. Here’s how you can do it.