Financial Responsibility Starts at Home: A Lesson Plan For Parents
From rising student loan debt to an increasingly complex financial world, the need for our kids to be financially responsible is growing.
Teaching kids about money and how to be financially responsible begins at an early age. Children watch and learn how their parents and other adults handle financial situations, so it’s critical to demonstrate positive behaviors from the get-go.
Here are three ways you can begin teaching your children financial responsibility:
Talk about money
Research shows that many parents simply don’t discuss money with their kids. You can start by involving children in both large and small buying decisions. For young children, that might mean talking about the cost of items in a supermarket, while older kids should be included in discussions involving bigger purchases.
If kids aren’t engaged early on, they’ll have no sense of how much things cost, let alone an understanding of basic concepts such as budgeting, saving, and investing.
Teach the art of waiting
We might want to give our kids everything they ask for, but doing so could have negative consequences. A young adult unaccustomed to hearing “no,” might find it difficult to exercise control over money.
It’s only natural for money to burn a hole in the pockets of kids. But it’s important for them to discover the benefits of delayed gratification. If there’s a toy or a game they have their eyes on, suggest they forgo spending their allowance on ice cream of another immediate pleasure and instead save to make the bigger purchase.
Teach them to budget
An allowance can be a great first step in showing your kids how to manage money. Gradually spreading out the timing will also help your children to understand the need to manage their spending.
The goal of being purposeful and intentional is to set the stage for your child’s success. Once you define the financial values and behaviors that you feel are most important, you can take actionable steps to instill those values in your children as well.