Teaching Children Financial Responsibility

Money is not the most important thing in this world. This is one lesson that parents teach their children in an effort to veer them away from materialistic views. But, it is also a reality that people need money to survive in this world. A more important lesson perhaps is financial responsibility. Children need to be taught about the value of money at an early age. Money does not grow on trees – the money tree and the pot of gold at the end of the rainbow are mere story book ideas. It takes work and good money management skills to ensure that you have enough money for all your basic needs as well as for the little extras every once in a while.

The Value of Hard Work

Children have to be taught that money comes as a reward for hard work – alright, maybe not all that hard. They have to know that they have to do something to earn money. Even for adults, doing something that you are passionate about and getting paid for it is the best way to earn money. Cultivating and encouraging an entrepreneurial spirit is something that is also advised to teach kids how to earn money doing something they love. A child who loves to cook and bake can be the designated cook for the day and be paid for his “gourmet services.” Having a bake sale is also another great albeit not-so-novel idea to take kids through the experience of earning money.

The Value of Saving

The next step to teaching children financial responsibility is to help them in deciding what to do with the money that they earned. It is not really enough to tell them to save their money. They have to understand why they are saving their money. Parents have to take their kids through the process of deciding on where the money goes. Of course, the value of saving will have to be subtly “forced” into the process. A good way to get them to save is to start with a basic bank account that has a low initial and maintaining balance requirement. Some banks even have a zero maintaining balance requirement. But, this is really not all that important since you want your child’s bank account balance to grow over time instead of to dip to zero. Get your kids to put money in their bank account regularly or as often as possible. This goes with money that your kids get whether from doing chores, having their own little business, or saving their allowance.

The Reward of Successful Saving

You also have to make your children experience the rewards of saving. At this point, you can go for short term financial goals. Since your kids are well beyond their retirement needs, you can afford to indulge in goals like having enough money that they can use as their pocket money for your annual vacation next year or maybe money that they can use to buy the toy they have always wanted to have. As your child grows, his goals could be directed towards having money for college or perhaps to buy his first car. When your child learns why and how he should save, it will be easier for him to manage his spending as well. A financially responsible child is bound to be responsible in other aspects of his life too.