When you have kids, it’s natural to want to shield them from the more complicated workings of the adult world. But when your kids are young, that’s actually the perfect time to gently introduce them to topics that grow infinitely more complicated as we get older.
You don’t have to expose your elementary schooler to the divisiveness of the current political scene, but you can explain the importance of your civic responsibility by voting. And you don’t have to teach your six-year-old how to balance a checkbook, but you can teach them age-appropriate ways to manage money wisely. Here are some great tips and tricks to help you impart financial responsibility in a way that makes sense to your kids:
1. Stick to the List
If you’ve had the pleasure of taking your kid to the store, you know all about the whining that takes place no matter how quickly you hustle up and down the aisles. One’s bored, the other one’s hungry, somebody’s cold, someone has to pee, and most of all, everyone wants a treat or a toy. It can be tempting to give in, especially if you think it’s going to buy you a little peace and quiet. But it’s important to stick to your guns and stick to the list. By letting your kids know you only have enough money for the purchases you planned to make, you’re communicating the importance of planning wisely and sticking to your budget.
2. Make Allowances Count
Some parents give their kids an allowance without attaching any expectations to it. But having kids earn their allowance helps normalize the concept of having a job and being compensated for it.
You can have your kids earn their allowance by earning good grades, helping with chores around the house, or even doing good deeds. Even younger kids can help with volunteer positions at places like food banks and animal shelters: make volunteering a part of their routine, but pay them for their time so they really get a concrete idea of what it’s like to work outside of the house.
Making a household chart is a great way to track expectations and allowance.
3. Give Them Something They Can Bank On
Piggy banks are so last year. Real banks are all the rage for kids.
Minors can set up a bank account with the help of a parent or guardian. Over the months and years, your kids can watch their savings account balance grow as they
4. Spend a Little, Save a Little
As kids get older, they may begin to receive cash in lieu of gifts from relatives for birthdays and
5. Teach Kids to Invest in Themselves
Once you set up your child’s bank account, encourage them to use it more by matching contributions they make to it if you’re in the position to do so. If they opt to deposit $5 of their allowance or $50 of their birthday money, commit to depositing the same amount in their account. This gives them a great incentive to deposit more so they can double even more of their money. It also opens up the door for conversations about 401k plans where employers similarly incentivize their employees.
6. Get Kids to Help with Big Purchases
As kids get older, their tastes will often grow accordingly. The same kids who used to pester you for toys in the checkout line will soon be asking for high-end gaming systems or cars. For expenses like that, make it clear ahead of time that you expect them to contribute financially in a significant way.
For something like a gaming system, it’s reasonable to ask your kid to pay for half, or possibly to pay for their own accessories and games. For a car, you could either ask them to come up with a down payment, or you could bill them a fixed amount each month to represent a car payment. If they don’t make their car payments in a timely manner, they can have their car repossessed by mom or dad until they’re out of arrears. Either way, they should also be expected to pay for their own gas and oil changes and their share of car insurance so they can learn about the hidden costs.
Whether your kids are four or fourteen, it’s never too early – or too late! – to start teaching them about financial responsibility in an age-appropriate way. Financial independence is, it turns out, a priceless gift.