Teaching your Children Financial Responsibility

As a parent you want your kids to grow up, be successful and have financial security.  That doesn’t always mean they need to have a high paying job, it has a lot more to do with managing their money properly.  By educating your kids beginning at a young age they can be given the proper tools for saving, budgeting and controlling their financial future.

Kindergarten age is a good time to start introducing the process of savings by using a piggy bank.  Have a talk with them about why it is important to save money for something special and have them start doing small, age-appropriate chores around the house that you can reward them with money for.  Such things as helping empty the garbage cans around the house on trash day, feeding pets if you should have them, or aiding in the preparation and cleaning up for dinner.  Set an amount you are willing to give and make a chart for the chore and payment schedule.  Once the chore is completed give them their money and have them put it in their piggy bank.  What you may want to do is tell them once their piggy bank if full they can use a small amount of the money for a special item and put the rest aside as their savings.

Once they have grown a few more years you can look into expanding their knowledge of how and why saving money is important.  At this point exploring the option of opening a saving account at a bank would be a good idea as it will help show them the benefits of seeing how the money they has increased over time.  The topic of money should be an open discussion so they can begin to grasp the concept of the costs of items.  It may be difficult at times but having a good cop/bad cop approach when it comes to purchases can help.  Setting out realistic goals such as how much money can be spent each month on treats can benefit the development of decision-making skills, and when the time comes and they want something that is beyond their budget, don’t jump in and buy it for them (this is where the bad cop comes into play).

Upon finishing grade school and entering into high school would be a good time to introduce explaining how debt, taxes and basic accounting work.  As most of these topics aren’t being taught to kids in school it falls on the parents to inform their kids about the proper use of credit cards and how paying taxes work when they get their first job.  A handy tip that may work for when your young adolescent starts their first job would be the 1-1-1 method. How this method works is let’s say they have $300 whether that be earned from a job or gifts, the amount is split into 3, $100 on spending money, $100 into savings and $100 in donations.  This method can be implemented at a younger age to teach them about giving back to those in need.

Whatever way you decide to teach your child about saving money and having financial stability with be a choice that will work best for you and your child, just ensure that all discussions regarding money and finances are open and encouraged to be talked about.

 

Keenans Accounting Service was founded in 1998 to serve the Midland and surrounding area.  We’re a professional team who are dedicated to helping you define your bottom line. We keep a keen eye on your numbers so you don’t have to.