Summer is almost over, and that means it’s time to get ready to return to school. Do you have little ones returning to school? Or perhaps teenagers heading back to high school? Maybe you even have older children heading off to college.
Obviously, school plays an important role in our children’s development and growth. Not all lessons are learned at school though. Your child’s teachers can help them with reading, writing, math and more, but there are plenty of other important lessons that have to be learned at home.
Perhaps one of the biggest lesson’s children learn from their parents is how to handle money. Children start learning about money almost from the time they’re old enough to ask for a toy or candy in a store. They see how their parents make buying decisions and handle money. Those observations then influence how they view money as they get older.
If you want to teach your child to be financially responsible, your own financial behavior is a great place to start. There are also specific actions you can take to help your child see how their own financial behavior can affect their lives. Below are a few strategies to consider as you teach your kids about financial responsibility:
Teach them to budget.
An allowance is a helpful way to teach your kids about the value of money, as well as the correlation between work and financial reward. Establish a list of chores that have to be completed to earn their allowance. You could pay them weekly or even bi-weekly.
You also may want to help them establish a budget for their allowance. If they earn an allowance and then quickly spend it, they aren’t really learning about how to manage their income. Help them develop a budget and prioritize items that are important to them.
Show them your budget.
Do you have a household budget? Nearly a third of all Americans don’t use one.1 If you don’t use a budget, now may be the time to reconsider. A budget can help you make smart buying decisions and stay on-track to reach your financial goals.
A budget can also be a great educational tool for your kids. If they’re teens or even in college, you may want to show them your budget. It can be an eye-opening experience for a child to see just how much money is required to live comfortably. That can inform their financial decisions moving forward and help them understand the importance of savings at a young age.
Paying an allowance is a great start, but you can also be creative in how you pay that allowance. For instance, you may want to pay a portion in cash but also pay a portion in a “savings account.”
For younger children, the “savings account” may just be a glass jar where they can see the money accumulate. For older children, an actual bank account may be more appropriate. As your child sees their money accumulate, they’ll gain an appreciation for saving.
Give them earnings opportunities.
A regular allowance is nice, but it’s possible that your child may start to take that regular income for granted. Give them opportunities over time to earn more money. For instance, you could give them a “promotion” by increasing their chores and raising their allowance.
You could also offer opportunities to earn a bonus by helping with more complex chores. For instance, they could help with a yard project or even babysit a younger sibling to earn additional money. This again reinforces the correlation between work and income, which will help them develop the right mindset as they get older.
Ready to teach your children valuable financial lessons by getting your own strategy on-track? Let’s talk about it. Contact us today at Protecting Your Retirement LLC. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation. Our Telephone number is 913-648-2700.
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