[dropcap]D[/dropcap]o your kids know what financial responsibility entails? Understanding what budgeting and saving mean is not something that only adults should be knowledgeable about. Parents can also teach their kids about the value of money, though in a different way than how you would explain it to another adult. The earlier you start the lessons, the easier it will also be for the children to grow up into financially responsible adults. They will learn to live within a budget and enjoy life just the same. Financial responsibility is not without its benefits, and they must be made aware of that.
Start at an early age
The earlier parents start teaching their kids the value and importance of money, the easier it will be for them to grow into a financially secure adult. Keep in mind that every single age should have a different learning approach taken. After all, a 5-year-old will not understand the concept of saving and budgeting. They will, however, understand what it means to wait for the swing to be free. Use activities as metaphors for them to understand patience. That same patience can then later be used to explain the importance of waiting to purchase something they want until they are able to do so. As a parent, you should use situational learning to your advantage.
Budgeting and saving
Budgeting is something kids should be made aware of. One way they can learn to do this is by giving them an allowance once they have done their chores. As soon as they receive their own money, they can choose what they should and should not spend it on. This is where the discussion of needs versus wants will have to come up. Even when you are shopping with your child, you should discuss with them whether a certain purchase is or is not required during that time. Should the item be borrowed? Can it be found cheaper somewhere else? These are the type of questions you should let your child hear. That way they too can learn to ask questions before they make a purchase.
There is value in saving, and if young kids do not know that, they will find it much harder to learn later in adulthood as well. Consider giving them three jars, one for saving, one that is for spending and one for sharing. The saving jar will be for the bigger purchases they want to make and will have to wait for. The spending will be automatic, perhaps on candy or chocolate, and the sharing will be for them to spend as a thank you for someone else. As a parent, you should guide them along the way for them to learn how to prioritize their allowance properly.
Living with what you have
Teaching kids about financial responsibility will also teach them to live within their means. It is incredibly important so that they do not grow up into a life of debt. They must learn how to organize their finances at all times so that they can always afford what they are buying, or so that they have the money to pay back their line of credit. Tell kids what the difference is between using a debit card and a credit card, the money they have versus the money they are loaning.
Teaching honesty
Honesty and responsibility often go hand-in-hand. Therefore, it’s important to teach kids about the value of honesty in everything they do, and that quality can be transferred to other aspects of their lives. Paying bills on time, for instance, is an honest endeavor, as well as a financially responsible one. Moreover, if you are in debt, you are not above paying it, and taking action is thus another responsible act.
Benefits
If the numerous benefits of saving and budgeting are made clear from the start, the incentive to do so will be even bigger. For instance, more expensive items require saving, and it is thus something to work towards and look forward to. Moreover, you do not want your kids to live a life that is filled with debt and headaches, to the point that they do not know where to get the necessary money to pay for items.
Emergency Situations
Financial responsibility will also aid people in emergency situations and is incredibly important as a result of it. You never know what can happen when, and a safety net is always needed. The sooner kids understand this, even if they don’t until they are teenagers, the better they will fare in the future.
There is another scenario, and that is when an emergency occurs, and the necessary money for it does not exist. In these situations, you may not have done the best job at saving and could even be a victim to bad credit. Remember that there is always a solution. Loans are possible even in situations where credit is not the best. You can tell your kids, who are grown up at this point, and most likely young adults themselves, where to read more information about these types of loans online. It is always possible to get back on a financially stable track; it simply may require some time if you lost sight of it for a while.
Set an example
Parents must set an example for their kids by acting as role models. This is also a good reminder for parents as they cannot slack or fall behind in their responsibilities, especially when it comes to money. Children look up to their parents and often copy the behavior they see from those that are older than them. If you are not an accountable parent, how can you hope for your kids to be?
Financial responsibility is not learned in the span of a week. It is something that becomes easier for adults if they were taught as kids, and it is something that will benefit them throughout their entire lives, leading up to retirement. It’s an honest lifestyle which also teaches anyone to be happy with what they have, once they become good at saving and budgeting. Making the distinction between a need and want is not always easy, but it gets easier with the proper guidance from a parent.
