Do you want your kids to be confident participants in the economy? Then you’ll need to get them up to speed on managing money and prepare them to make critical financial decisions in the future.
The sooner your kids are financially informed, the better their sense of discipline will become. So here are six ways you can teach kids to be more financially responsible:
Show Them the Risks and Dangers
If you sugarcoat the world of finance, you’re doing your kids a great disservice. They need to know what happens when you don’t pay your taxes and be acquainted with the tax calculator and other tools you use to plan out your financial obligations.
Kids should also know the risks associated with credit cards and student loans, common money scams, and all the different forms these things can take. Finally, they should know what everyday goods cost and all the possible losses attached to every financial decision.
Teach Them Gratitude
While they need ambition, children should also learn to be satisfied with what they have. Money may be important and hugely influential in our lives, but it isn’t everything. That’s the idea you want to drive home so your kids can strike a balance and cultivate a sense of gratitude.
Put Them into Money-Making Mode
Once you’ve taken them through the basics of finance, it’s time to guide them through multiplying the money they have. This could be through entrepreneurship, employment, or investing.
An allowance can help achieve the same result. But again, the goal should be to foster a sense of fulfillment from the effort exerted.
Create a Culture of Sharing
Passing down your financial principles to your kids is critical, but it’s just as vital to model altruism so they can grow into quality adults. Making it a one-off thing won’t help much. Sharing with others must be part of daily life so your kids can identify causes close to their hearts.
One trick is to have them allocate a percentage of their allowance towards gifting. Sure, they’ve donated some old toys to goodwill, and they may have gotten a friend or relative a birthday gift. But such gestures generally aren’t enough to cultivate a long-term habit of altruism.
The goal is to make giving intrinsic to their lifestyle, and encouraging one philanthropic act per month should reinforce that charitable mentality.
Ease Them Into It
Teaching a 7-year-old about debt is rushing things. You need to introduce money concepts bit by bit and according to the child’s age. You can start them off with something as simple as saving.
When it comes to subjects such as investment, you can save that for the teenage years. As with education of any kind, it needs to be taken in bite-sized portions to be palatable.
Walk Your Talk
You can’t establish healthy money habits in your kids while yours are unhealthy. Children are impressionable, so they need to see you applying the techniques and concepts you’re passing on to them.
You must maintain the same tune and stick to your story while embodying your gospel. Then, as they notice how well it all works out for you, they’ll be motivated to follow your path.
Let the Learning Begin
And that’s how you raise the next generation of financially perceptive people. If you can employ as many of these tips as possible, you’re in for a win. Just make sure to remain as patient and understanding as you can be.
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Hi, I am Betty Knight, Owner of this site! I am a 'nearing 30-year-old', happily married to 1 awesome man. We live in the beautiful tourist town of Franklin NY.