Steadfast Finances3 Ways to Teach Your Kids Financial Responsibility

3 Ways to Teach Your Kids Financial Responsibility

Filed in Personal Finance 3 comments

Children are rarely taught the essentials of how money really works in America, guarded by parents that aim to provide rather than educate. Sure kids know that making money by going to work is important but the small odds and ends of finances are usually not introduced until early adulthood. By that time, children have already been bombarded with various images of products, services and brands they are convinced they want to buy. As a parent, take it upon yourself to present a realistic view of money to your children from an early age to instill financial responsibility and raise a budget-conscious adult.

Strategic Grocery Shopping

Most parents just throw their kid in a cart and mosey up and down the aisles until it’s time for the check-out lane. From a child’s point of view, the supermarket is just a place to beg for cookies. Realistically, a large percentage of your family’s budget is spent on food and your children should know what kinds of strategies you use to bring food to the table rather than just seeing the disconnected, end result. Engage your kids in some strategic shopping by explaining your food choices.

Don’t just reject the pricey brand name cereal without an explanation. Tell your child that this cereal (while probably also on the reject list due to its sugar content) is more expensive because it carries a brand name and other options (like bagged, generic cereals) are more cost-effective and taste almost the same. When picking produce, show your kids that some things are bought by the pound while others are priced per item and some things are cheaper because they are in season. This may make your trip to the market a bit longer than usual but it will provide meaningful information that your child will internalize and apply to choices they make in the future.

Monopoly

There are thousands of mindless ways to keep your child entertained. From apps to computer games, hand-held devices and game consoles, your kid can be completely out of your hair for hours at a time with a digital babysitter. To teach them something beside how to shoot at moving targets, introduce some good old-fashioned monopoly. Nothing teaches children the fundamentals of the American financial system (the theoretical version at least) better than this old school classic. Sure it takes several hours to complete a game but since you already know how to play, it gives you a chance to bond with your child in a financially educational way.

Don’t Just Give an Allowance

Giving your child an allowance is half of a good idea. By giving them a small sum of money every week, you begin to teach them financial independence where they can spend their allowance on something they really want outside of the necessities you are providing. Why not take it a step further? Instead of plopping cash into their little hands, give them the option of putting some of it into an interest-gaining savings account (i.e. back into your wallet until a later time). Think of yourself as a bank and use this dynamic to teach them about the function of financial institutions.

Your child’s financial education begins with you. By giving them everything they want, without explaining how money works, you are cheating your kid out of understanding a fundamental element of adulthood. Many kids learn some of the tricks of the trade in school, trading lunches and bartering with their allowance. Supplement this limited information with practical financial information on your end and you will set your children on the path to successfully tackling the real world in the future.

Authorbio: Dominique Brown of YourFinancesSimplified.com wrote this article. You should subscribe to his blog and his video blog!  He gives great financial tips!

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Posted by Dominique Brown   @   18 June 2012 3 comments
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3 Comments

Comments
Jun 18, 2012
5:28 pm
#1 Kris :

I like the last one the best. Its a practical way to teach your kids how to save. And why not have them earn the allowance? That’s another real-life money lesson.

Jun 22, 2012
4:21 pm
#2 Melinda Ige :

I have always enjoyed the teachable moments grocery shopping with one of the kids (not when I bring them all though, that’s too hard!!) . We’d compare prices, sizes and prices per oz. Sadly, we never seemed to have enough time to get through a game of monopoly, until someone suggested we play for a set amount of time, like an hour, and then count up everything at when time was up. That worked for us. Another idea is to make your own play money and make simpler games with buying and selling things. I have used the Picture Perfect play money App and that’s been fun.

Jun 28, 2012
1:45 pm

Kris and Melinda,

There are so many opportunities to teach kids about money, the grocery is one of the best.

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