Every parent seeks to help their child succeed in life. The importance of raising financially responsible children is high on the list of skills that many parents wish to impart to their children.
Among the countless self-help books, articles, and podcasts that discuss this subject, there is one simple principle that remains timeless: learning to live within your means.
Read on for some tips on how to instill these values in your grade school-aged children.
Set a Good Example for Your Kids
Creating a budget and being disciplined and intentional about spending is a major component of a financially healthy lifestyle. Perhaps the single most important action you can take is to lead by example. The best lessons we impart are the ones that are the most authentic, and demonstrating a responsible approach to money will be noticed and absorbed.
Watching as you pick-and-choose your purchases, research your options for major expenses, and behave judiciously with your money will impart a strong impression on your children.
You can also talk with your kids, sharing with them your budgetary considerations and how you organize your spending into buckets of needs, wants, and saving for the future.
You can make these examples concrete, such as by sharing with them that you allocate a certain amount of money for food. You can continue by explaining that this is the reason that you are only able to go out to each once or twice a month.
Along with being financial responsible comes the imperative to help them to realize that there are others less fortunate. Setting aside money to give to a charity or cause they care about is a powerful reminder to be grateful for what they have.
Give Your Children Agency to Make Financial Decisions
There is no better teacher than experience, and allowing your children to experiment with their own spending choices will give them a tangible feel for the inherent trade-offs of making financial decisions.
Providing a weekly allowance is a great way to start. Having a finite amount of resources at their disposal will help them to understand the consequence of their choices and how their resources shape their purchases.
Ideally, the allowance is compensation for chores and other responsibilities performed around the house. Connecting objectives to concrete benchmarks is effective in the workplace, and it has a place at home as well. If there are certain items that your child wants (i.e. a gaming system, a new computer, basketball shoes, or even a pet), link their ability to achieve these wants with a set of performance-based metrics that they must fulfill.
The feeling of earning something through dint of hard work and commitment can be incredibly satisfying. Anything worth achieving requires effort, and understanding the trade-off between labor and reward is part and parcel of appreciating the value of money.
Economics is all about making choices when faced with limited resources. Help your kids to experience these decisions for themselves.
Show Them the Virtues of Saving
There is a constant tension between consumption and saving for future use. We go through our daily lives bombarded by a stream of advertisements trying to convince us to part with our money.
There is certainly room for discretionary spending, but understanding the distinction between needs and wants is a vital skill to cultivate. Making sure that you have the cash required to provide for the essential purchases sits at the very core of managing responsible finances.
Think through upcoming purchases that are on the horizon, and decide which ones your children can participate in. For instance, there could be an imminent family vacation that could include some indulgences, if you start saving now. Tickets to certain attractions are pricey, so let them know that your future entree into a water park is contingent on skipping your weekly pizza dinners in the months prior to your departure.
Depending on their level of interest and literacy, you can also begin talking to them about the importance of saving for future, hard-to-grasp expenses such college tuition, weddings, or retirement. (They may wonder how their retired grandparents are able to pay for certain expenses, for instance.)
Do Not Be Afraid to Say “No”
Our lives are full of choices, some substantial but most fairly trivial in nature. We cannot say yes to everything that comes before us, and we must constantly pick and choose based on our needs, wants, and financial circumstances.
Being a parent means guiding, encouraging, and occasionally threatening your kids. It also means being a source of authority, with ultimate control over their lives and choices in their younger years. Just as you would not allow them to eat chocolate for every meal, you can also say no to certain potential purchases.
While we all want to give our kids the very best, part of growing up is learning how to make choices when your options are vast. By helping them understand that they cannot do everything, you will allow them to begin focusing on obtaining what they truly desire.
Conclusion: Learning the Value of Money
Teaching financial responsibility revolves around making sure to live within your means. This will serve your children throughout their lives.
Learning to value money as a mechanism to help support your chosen lifestyle, instead of a means in and of itself, is an important lesson to grasp.
At the end of the day, you want your children to be good people, and happy, healthy, and productive throughout their lives. Helping them navigate the finances of life is a crucial aspect of each.
Learn money management, and use data-driven stock insights with TipRanks.
