How to Teach Financial Responsibility to Kids

Teaching financial responsibility to children will give them the financial foundation they need to act sensibly as adults. Studies show that people who learn financial responsibility at a young age also have less debt and more savings when they become adults.

Difficulty: Moderately Easy

Instructions

1. Talk to the child about money. Explain about the different types of bills you pay and the importance of meeting payment due dates. Also talk with the child about comparing prices on items in order to find the best deal available.

2. Show the child how to make a budget. Budgeting is a great skill to learn. Have the child help you create a budget with her allowance. Show what money she has, where she could spend it and how to save it.

3. Take the child grocery shopping. Explain how much money you have budgeted for groceries and talk about what you need to buy. Show him how to compare products and prices for the best value. This allows him to experience what it is like to work within a budget.

4. Open a savings account with the child’s money. Add a little at a time and teach the child how to keep up with the register. Explain the interest on the account and how it works.

5. Discuss the possible dangers of impulsive shopping. Tell the child to avoid buying items on a whim. Differentiate between items that are needed and those that are wanted. Make sure the child understands that if an item is expensive, it is possible to save money to purchase it at a later time instead of going into debt and purchasing the product right away.

6. Pay the child for doing chores in and around the house. This will help the child learn the value of earning her own money. It will also help instill a work ethic. Be sure the child completes her chores and meets a set standard before paying her for the chores.

Tips & Warnings

• Practice financial responsibility in front of the child. This will reinforce what you have taught him.