Fiscal responsibility is learned. Every dad can attest to the difficulties of explaining to a toddler why daddy can’t buy that new toy. A planned quick trip to the food store is often thwarted with demands of shiny, colorful objects that instantly attract the most docile of children. What often begins as a perceived opportunity to explain how money works ends with the ultimate rejection you learned from your parents – saying no “because I said so”.
The truth is that we would love to buy our kids everything. We sometimes feel guilty for not being able to buy them more. But the lesson of saving money is something that must be taught early in life and as your child ages, it becomes necessary to reinforce the importance of handling money properly and add even more to the conversation.
Get Your Toddler a Piggy Bank
Explain the difference in those silver coins and how they add up more quickly. Toddlers enjoy putting coins in their banks and they need to be rewarded for doing this. Let them pick out a gift they’re saving for and explain the process of increasing funds in realizing the goal – as it happens.
When the savings goal is achieved, joyfully escort your growing bundle of joy to the store and allow the purchase to be made by him/her.
Open a Savings Account
After your child leaves toddler-dom behind, it’s time to create a bank account. You’ll be using those piggy-bank principles that are now firmly established and you’ll now introduce the bank book – illustrating the credit/debit system.
Some banks even have accounts specific for children and they come with added benefits to help kids understand the importance of saving. Use every tool at your disposal.
Make Routine Trips to the Bank With Your Kids
Anything a parent is a part of becomes more important to a child. Get involved in the banking process by planning routine trips to your financial institution and applaud the act of adding money to a savings account. If it’s important to you, your child will feel a sense of accomplishment in handling the finances in a way that makes you proud. You’ll be building fundamental money-saving skills while helping to build confidence.
Give an Allowance
Children don’t work – or they shouldn’t anyway – but they still need to earn money. Allowance should be money earned by completing chores or tasks assigned. Make sure that you pass on your father’s advice in explaining that “money doesn’t grow on trees”. There’s a good reason this wisdom keeps getting handed down through the ages.
This is a great time to introduce how bills work. Make it a point to show your child how much money you earn and how you have to allocate portions of your paycheck to bills – and explain the consequences of not paying those bills.
Time to Get a Job
Working as a teen can sometimes be a bummer but it’s important that your child find something that provides a few hours a week. These lessons can go a long way in understanding fiscal responsibility.
Don’t let your teen work too much though. Forty-hour work-weeks will come soon enough and there are experiences in school that shouldn’t be missed. Encourage your child to take part in social activities while working a few extra hours every week. However, if your teen is starting to spend all his extra time playing video games and farting around on Facebook, it might be time to look at working a little more.
As your child ventures into adulthood, the benefits of fiscal responsibility become an unmatched life skill. Make sure you’re using every opportunity to prepare your young adult for the best possible financial future.