Parents want the best for their children, and attempt to pass on all the skills they will need to be happy and successful adults, but an area that is often overlooked is financial responsibility. A little effort and a few basic principles can go a long way to setting children on the path to good financial habits.
Money Doesn’t Grow On Trees
Children need help understanding that money comes from work. Parents can set up a chore board with dollar amounts listed next to each task to help make the concept of money real. Even young children can empty trash cans, wipe tables, water plants, weed the garden or feed pets. Children will feel the value of money when it is tied to the hard work that they have done.
Set Some Aside
Children can be taught early to divide their earnings into saving, spending and giving categories. They will enjoy having their own spending money, but will also be excited to watch their savings grow. Additionally, it’s an invaluable lesson to teach children that money isn’t just used to buy things that one wants or needs; it can also be used to help people.
Let Them Make Mistakes
It can be difficult for parents to watch their children suffer regret or disappointment, but it is far better to allow them to make small mistakes when they are young than see them suffer larger and more painful mistakes in adulthood. If a child has been saving his money for a special toy but decides to spend it on candy instead, it’s best to let him experience the consequences of his decision. Dave Ramsey advises that parents talk through the consequences, but ultimately give the child the dignity of making his own choice.
Model Financial Responsibility
A parent is a child’s main source of knowledge about the world around them, but as always, actions speak louder than words. As Shannon Ryan from The Heavy Purse writes, “The reality is your children are learning now, regardless of whether or not you are actively teaching them about money. They observe how you handle money and will mimic your behaviors and inherit your hang-ups. So I suggest you take control now and help shape their money views, rather than having to play clean-up later.”