Raising Financially Responsible Children

Teaching Children About Money and Financial Responsibility

Children should begin learning about financial responsibility and money when they are old enough to count. Counting pennies, nickels, dimes and quarters is a great way for children to practice math skills in kindergarten, first and second grade. By third grade they can incorporate dollars and learn how to add money. Towards the end of elementary school children should be able to subtract money and learn how to count back to give the appropriate amount of change. These are life skills that are essential to learn.

Counting money is only part of educating children about it. It is common for children to get money for their birthdays, holidays and special events but what about throughout the year? Adults work and earn a paycheck. We are able to budget and learn how to spend accordingly. The same lessons can be taught to children on a smaller scale. Children often want candy or a small toy while out shopping with their parents and grandparents. Educating them that those items cost money but they can earn that money in order to purchase the item is important. As children begin doing chores at home for a weekly allowance they begin to learn about working for things they want. They also learn how to save for things they want. Children may have their eye on a toy that is $20 and once they earn that $20 they immediately want to go to the store and purchase their coveted object. This is another time to learn about sales tax and calculations. All of these life lessons will better prepare them for larger purchases as they grow up.

Parents and care givers can also take the time to teach children about saving a portion of their money so they have it for later. When children realize they have some allowance money set to the side because they have been dividing it as they earn it, they often appreciate the fact that later they can just go to their allowance savings and take from it for something else they may want. While these methods are simplistic and with small amounts of money; they will teach children the value of a dollar earned, how to count their money, how to figure tax and how to save for things they may want later.

Money Lessons To Teach Your Children

When children get older and move past a small weekly allowance and onto grass cutting or baby sitting it is time to begin teaching them about budgets and saving on a larger scale. Both of those first jobs come with expenses. Babysitters often purchase coloring pages or first aid kits to take with them. Those who cut grass must purchase gasoline for their lawn mowers

Parents can take this opportunity to teach their older children how to create a spread sheet showing money earned and then money that needs to be set aside for supplies they may need to perform their jobs. This is the ideal time to show children your own home budget that includes utilities, grocery expenses, mortgage payments and other monthly expenses. Parents can explain the value of shopping around for better prices and use their own utilities as the best example. Companies such as Direct Energy are able to offer discounted energy rates on utility bills. Showing previous bills alongside current ones with reduced prices will help educate children on the value of looking for better prices and comparing competition. This will help children understand how one big box store may have more cost effective first aid kits and how some gas stations offer fuel at reduced prices compared to others. Learning how to shop around and price shop early will help children learn how they can shop around as adults. By showing them the proof in the paperwork they will see that prices are not always set in stone and that there is flexibility by going with different companies.

Fiscal awareness taught at a young age will only produce money awareness earlier in life. Children who learn early on how to save, budget and price compare will use these skills for their entire adult life.