We all know that parenting is tough. Not only do you have to feed them and keep them alive, but throw in teaching them how to be financially responsible and you might be feeling like you’re ready to wave the white flag. Don’t give up!
To quote Dave Ramsey, “More is caught than taught.” When it comes to money management for kids, it’s more about showing them what to do rather than telling them. Your kids are going to learn so much from how you manage your finances. That means raising a financially responsible child starts with you.
How to Be A Financially Responsible Parent
One of the best ways to be financially responsible as a parent is by living on less than you make, doing a regular budget, saving (both for now and the future), and doing your best to live a debt free life.
By showing your kids how to be financially responsible with the hard-earned money that comes your way, it’s going to stick with them over time. Let your children see you paying bills, budgeting with your spouse, and even invite them into the conversation (when appropriate).
How to Raise A Financially Responsible Child
Now that you’ve built a foundation for your own finances, it’s going to be a lot easier to teach money management to your kids. Here are a few ways to get started:
1. Talk about money—often.
Money isn’t everything, but it is an important part of life. When your kids grow up without money conversations, they’re not going to understand the importance of how to handle their own money one day. When you’re paying your bills or doing a budget, show your kids what you’re doing and explain why. They may not be interested for too long, but remember . . . you’re building a foundation.
2. Invite your kids to the family budget meeting.
This might be for the older kids, but inviting them into the weekly budget meeting will help them begin to understand the idea of living on less than you make and being a good steward of your income. Let them speak into the budget, sharing what extracurricular activities they have coming up. This gets them thinking ahead and hopefully helps them understand what you mean when you say, “it’s not in the budget.”
3. Introduce an allowance.
Introducing an allowance gives your kids an opportunity to learn about the connection between work and money. How you decide to pay them is up to you, but cash is always a great option. Not only do they get to physically hold it in their hand, they also get to experience that feeling when they purchase something and it’s gone. As they get older, you can open up a checking account to teach them how to use a debit card (and how to make sure they don’t overspend).
4. Teach them the importance of giving and saving.
If you don’t show them now, who will? Whether you give a tithe or you just like to be generous with a portion of your finances, it’s important to pass that concept to your kids. Showing them that living life with an open hand (especially when it comes to finances) will allow them to experience the joy that comes from generosity. The same goes for saving. Saving and spending are opposite sides of the same coin. When you give your kids their allowance, share how vitally important it is to hold on to some of their money for a rainy day. As they get older, you can build that concept into an emergency fund, sinking funds, and even retirement funds.
There are so many resources out there on how to raise a financially responsible child. Not only are there books and classes, but there’s now social media accounts, YouTube videos, and more. But despite all of the resources out there, you’re the best person for the job—especially as you get your own finances in order.
Any opinions are those of the author and not necessarily those of Raymond James. This material is being provided for informational purposes only and is not a complete description, nor is it a recommendation. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Material provided in part by Redstory, an independent, 3rd-party company.