How to Teach Your Child about Financial Responsibility

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Teaching your children financial responsibility is one of the greatest things that you can do as a parent to prepare them for their lives as adults. Nurturing a child emotionally is also vitally important, but to turn a child out into the world with little or no knowledge of basic finances has the potential to be a true disaster. Read on to find some basic tips on raising a financially responsible child.

When teaching a child about financial responsibility, parents should have extreme self-discipline. At the very first and as the start-up, examine your own attitudes and habits about money. As most experts say “Kids are great imitators” so the best and most effective way to teach kids about anything is by becoming the role model. If you want your kids to learn how to save money, you should show him how you do it. As another saying goes “action speaks louder than words”. If you are a parent with no discipline on spending money or repeatedly waste money, that’s what your kids are going to learn.

This article intends to the kids with an age between 3 and 12 years.

– Start speaking to your kid about money and its worth. Start it at the earliest from an age of 3 which is highly ideal for this. Begin teaching the first principal of wise money management by counting coins. Let the kids start learns about money by holding coins, counting coins and recognizing the differences between each one. Present them a piggy bank and give coins regularly to put into that. Later, they can have a great time counting coins and dropping each one in their very own piggy bank.

– Teach your kid how money is being used. Discuss the expenses you have for your household to your kid and show your kid the bills you need to pay with money. This is the best time to explain to your kid why you can’t always buy the toys he/she wanted.

– Present opportunities to earn. All kids need a little jingle in their pocket. That’s the purpose of allowance. Allowances can be tied to chores or as some parents prefer, allowances are considered to be a base salary. Whatever allowance system you subscribe to, it’s a good idea to include opportunities to earn additional money as well. For example, a surprise bonus rewarding a good attitude, a job well done or special effort being made is a powerful motivator.

– When you choose to give pocket money as a reward, remember that the rules must be understood by everyone involved. Kids must understand how much you give and for what. If your child can read, make a list of the chores with their matching reward amount. If your child is younger, draw pictures or cut them from a magazine and draw circles to represent the coins they will get for each task. Having an understanding will prevent bargaining and allow both parents to handle the situation in the same way.

– Teach the art of spending. Deciding how much and how to spend the money and on what is definitely an art worth practicing. Teach the good practice of convince themselves that buying something they don’t need on sale is saving. The art of spending is defining what you need, recognizing the pleasure of buying something very special and then looking for the exact item that fits the bill.

– The first time your young kids ask you for a loan, be happy, because now you can teach them about savings. Only when kids want something beyond their financial means can you explain why saving money is a good idea. Teach them to always put 10% of their money aside. At a young age, they will not understand what 10% is but tell them it is a tiny piggy bank in the piggy bank of money you keep there for emergency. This is the money you keep for something big or special that you want later. Tell them to put 1 out of every 10 coins in the tiny piggy bank. Saving is a good lesson in waiting, something that is hard for young kids, because their perception of time is not fully formed.

As the child’s earnings grow, he will learn not only math skills, but life skills as well. He will learn the value of money; that money is earned through hard work and daily effort. Some parents may opt to exchange the play money earned for actual money later down the road. For our children, they often asked us to buy something each time we went to the store. The “job duty” project has minimized their requests because the responsibility now falls upon their shoulders. The money they earn is used to purchase something they want. On some occasions, our children will get to the store only to see something different than what we went to the store to purchase. Usually this new found item costs more money than what has been saved. At this point, our children need to decide if they will buy what they planned or if they will return home empty handed so they can save more money to purchase the more expensive item. What a great life lesson to be learned!

As I mentioned at the beginning, this article suitable to kids between the age of 3 years and 12 years. Next article would discuss how to bring your teenagers with financial responsibility. Keep visit.

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