One of the things that many parents find difficult to talk to their children about is financial responsibility – or any issue related to money. While it is common knowledge that educating children about the value of money is essential, doing it so they would easily understand it can be challenging.
Raising Financial Responsibility Children
Typically, parents are advised to introduce financial responsibility as soon as their children know how to count. Kids may not need the money yet, but teaching a four or five-year-old wise ways to use money will help them become financially literate early on in life. It won’t be an overnight process, but the benefits are plenty.
So, how should you start your child’s exploration of money and financial responsibility?
Talking to your kid about using money properly, saving, avoiding debt, and investing will not be easy. However, there are now apps and games that parents can use to make their tasks easier. One example is a kids chore app that rewards children for chores they complete. It has features that allow parents to train their kids to understand the value of money through saving, sharing, and investing.
Teaching your child means instilling several practices that encourage financial responsibility. Here are tips on how you can do this.
Tips for Teaching Your Child to Be Financially Responsible
Find an interesting way of talking to your child about the importance of money. You can use play or play-acting; you can act as a supermarket cashier, and your kid can act as the customer. Use play money that your child can use for the items he intends to buy.
Create some situations based on actual experiences. For example, please have your child buy items that he cannot afford to pay for. This is a fun and subtle way of teaching him the value of money. Playing board games like Life and Monopoly also helps kids understand the importance of money.
You can also talk to your child about money in an informal manner, such as when he wants something he doesn’t need. You can casually chat about why buying what one needs is more critical than purchasing what one wants.
You can do this during role play or play-acting, or bring your child to the supermarket. Allow him to pick up one or two items. Explain to your kid that he must pay for the items before taking them home. Give your child some money, or consider implementing student credit cards and allow him to pay for what he bought. Children like it when you give them “adult tasks.”
Create a job or chore chart that breaks down household activities among all family members (including yourself). Assign simple tasks such as putting toys back in place, setting the table, making the bed in the mornings, doing homework, and putting dirty clothes in the laundry basket for your child. Each time your kid completes a task, input this into a chore app so you can track his progress. Give out rewards weekly (or monthly, whatever suits you best).
Tax is a complicated concept, and explaining it to your child will be challenging. What you can do instead is show him what it is about. First, let him know that a portion of his reward will be given to the government as a tax payment. In simple terms, explain to him what tax is for. Then let him know that you will deduct a small amount from his reward money and deposit this in his bank account. Years later, he can get back the money you deducted from him when he needs to buy something important.
Give your child an allowance. If you have a teen or pre-teen, a monthly allowance is ideal. For younger kids, a weekly allowance will do. Create opportunities for your child to spend money, such as bringing him to the supermarket. Observe how he uses his money and allow him to ask you for (or offer to give) advice. Allowing your child to spend his allowance is an excellent start to practicing budgeting.
The Save-Spend-Share model represents what anyone would ideally do with hard-earned money or bank accounts. To make the practice more interesting for your child, prepare three glass jars or tin cans and label one with Save, the second one with Spend, and the last one with Save.
Explain the concept to your child. The Save jar is for money set aside for something big or expensive that he wants to buy, like a PlayStation or a bicycle. The Spend jar is money that he can spend on anything smaller and less expensive – as a reward for his hard work. Some examples are a new pair of jeans or shoes, a toy, or chocolates.
The Share jar is for money your child will give his chosen beneficiary. This is a good way of encouraging your child to practice philanthropy and learn the importance of sharing his blessings with the less fortunate.
Discuss with your child and decide on the percentage that should go into each jar. These fun and creative ways of teaching your child to be financially responsible will help instill in him the value of money early on in life.