When your child learns how to budget and be responsible with money, this is a skill that he will carry with him throughout his life. It will affect his credit score. It will affect his ability to find a job. It will affect his quality of life. This is why it is of utmost importance that you teach your child how to budget their money responsibly. Here are some ways that you can teach your child how to be responsible with money starting at a young age.
*Give your child an allowance
In order to learn to be responsible with money, he will have to have money to be responsible for. Give your child an age-appropriate allowance, and give them certain things that they will have to budget for, like clothing, toys, or other things that they want. By giving them the power over what they can use their money for, and giving them the responsibility of buying certain things for themselves, it will help them to understand that some things are more important than others.
*Set a good example
If you are telling your children about how to be responsible with money, but dodging calls from creditors, this does not set a good example for your child. If you do run into financial difficulties, it is a good idea to tell your children what is going on and even admit to your own mistakes if you have made them. Make sure that they understand what is truly important. Help them to set priorities by setting good priorities yourself. You can still file bankruptcy, or take any financial steps necessary to clear your debts. The most important part is to stay out of debt later on, so you continue to set an example for your children.
*Put your children to work
Children need to learn that making enough money to survive takes work. While you certainly don’t want to use your children as slave labor, you also want to instill a healthy work ethic in them. Pay them for the things they do to help around the house, so that they are able to be rewarded for their efforts. This will also teach them that hard work reaps rewards, and encourage them to work hard enough to take care of themselves later.
*Let them make mistakes
Many people learn more from failure than they do from success. If there is something that they really want, and they have been saving for it, but it turns out not to be all that they have hoped, this is perfectly fine. They will learn from that and buy something of higher quality the next time. If they fail to save for something they want, don’t give in and buy it for them. This only leads to them having a sense of entitlement. Let them learn from their mistakes.
*Teach them to save and set up a budget
Saving is one of the most important aspects of budgeting your money. Setting up a budget tells them how much they have to spend on things that they want, and shows them that the money will stretch if you take care of it.
These are some of the ways that you can teach your children how to set up a budget and to be financially responsible. When children learn to take care of their money, they are learning a life-long lesson that will keep them safe in times of trouble, and will keep them from hitting hard times as hard as someone who does not know how to be financially responsible.