How to raise financially responsible children

One of the most valuable gifts you can give to your child is teaching them about financial literacy. Instilling good habits and education on money management from a young age is a crucial set up in this world for success. So how do we raise financially savvy children?

Start Young

Education to kids around managing finances doesn’t always have to wait, in fact, the earlier the better! Experts report that between the ages of 5 and 14 is when a child starts to form their ‘money mindset’, so we want to encourage healthy family discussions on money. Simple ways to introduce money as a concept and its value is through real coins and notes, along with a piggy bank where they can visually see how to save and spend. Playing games that involve a form of currency where the children have to count money and engage in cash transactions are also a useful education tool to teach the emotions around losing and gaining money.

Lead by Example

For children to develop healthy spending and savings habits, it’s important that the adult figures in their lives demonstrate their own responsible financial habits. Having discussions with children around sharing your own savings goals and budgeting can be a great method in helping them understand the importance of financial literacy.

Instil the importance of Hard Work

The idea that hard work pays off is encouraging when getting children to think about money. Entrepreneurial activities like a lemonade stand or dog walking are not only fun for children, but teach them skills in earning and reinvesting. Creating a household chores chart is also great to instil a good work ethic through children and shows that they will be rewarded for their work through pocket money.

Implementing saving and budgeting

When children reach the age where they are old enough to join the workforce through casual employment, helping them open up their first bank account is a pivotal step in their finance journey. Creating simple budgets from their income and allocating their funds into separate savings and spending categories will aid in teaching them the significance of managing their finances through thoughtful money decisions.

Encourage Smart Spending

Educating teenagers habits on smart spending and being money savvy can guide them to make responsible financial decisions. Teaching them ways around comparison shopping and evaluating the price and quality of goods and services will aid in helping them make smart decisions with their finances. It is also a good idea to educate on the concept of credit and responsible borrowing such as loans so they understand how the idea of debt works. Having this knowledge will be vital in helping them make informed financial decisions.

Summary

Starting early and investing time in your child’s financial literacy helps to build a foundation for their success.  Through guidance, practical experiences, and open and honest conversations, you can aid in the development of skills needed to ensure your child can navigate their finances with confidence.