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Six Tips for Raising Financially Responsible Children

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As a parent, you want to provide your children with the tools and support they need to thrive in life. Teaching them important life skills such as responsible financial habits will give them an advantage.

Conveying healthy financial habits will help your children save, invest, and build wealth throughout their life. Here’s how to teach your child financial responsibility to help them make sound financial decisions throughout their lives.

Begin with an Allowance

An allowance is often the first step on the path to financial responsibility. Receiving a few dollars every week or month is exciting, and it will make learning about financial skills more engaging.

Giving your child an allowance can teach them about a few key personal finance concepts. They’ll learn about the concept of money and its value. Being able to spend their own money will also encourage kids to begin paying attention to prices to determine what they can afford with their allowance.

Your child will discover the basics of budgeting as they learn to stretch their allowance to last an entire week or month, and you can encourage your child to save up their allowance for a large purchase.

Most parents use an allowance as a reward, whether it’s for proper behavior, desired grades, or chores. Rewarding children for completing chores with $5 to $15 a week based on their age is a great way to introduce them to the value of work. It creates a strong foundation for a consistent work ethic, and you’ll be surprised by how much a simple allowance can motivate your kids to help around the house.

Use Concrete Examples

You can make learning about financial literacy a part of your daily life to make these concepts feel more real. There are plenty of opportunities to incorporate these important skills into your daily routine:
  • Pre-teens and teens can help with meal planning and grocery shopping. It’s an important way to teach them to budget and shop for the best deals.
  • Younger children can pick their snacks for the week with a snack budget.
  • Encourage your kids to save up and contribute to major purchases, especially for toys and video games.
  • Gift cards to a favorite store or fast-food restaurant are an enjoyable way to practice budgeting.
  • Make back-to-school shopping fun by giving your child a budget and letting them pick clothes and school supplies.
Make Learning About Personal Finance Fun

Learning about the right financial habits should be fun and engaging. You can use games to make this process more interesting and appeal to your child’s sense of competition.

You can start early by introducing play money and a cash register set. Pretend play that involves counting money and giving change back can help your child develop important math skills.

As your child gets older, board games are a fun way to get together and learn about finances. Classics like Monopoly or Pay Day are ideal, but you can also try the Allowance Game for younger kids or the Stock Exchange Game for teens.

Playing as a family can also be an opportunity to discuss the economic and financial concepts children encounter in these games. Apps and online games like Financial Football are another fun way to learn about money.

Encourage Your Child to Get a Job

If you’re wondering how to teach your child financial responsibility, one of the best things you can do is encourage your child to get a part-time job.

A job will help your child become more independent and self-reliant. They will learn about the value of money, and having some work experience can be a plus when applying for college. Your child will also get a few references they can use to apply for a full-time job later in life.

It can be challenging to find businesses that will hire teens, but there are plenty of opportunities for earning cash, from babysitting to dog walking or yard work. There is also a demand for services like power washing, house cleaning, or tutoring.

Some of these gigs can even turn into profitable business ventures. Due to the current labor shortage, some teens are earning as much as $70 an hour with gigs like babysitting or basketball coaching.

Once your child turns 16, it should be easier to get a job at a local business. Popular jobs for teens include cashier, retail associate, fast-food worker, barista, and waiter. The retail and hospitality sectors are the top two industries for 16- to 19-year-olds.

How to Teach Your Child Financial Responsibility: The Save, Spend, and Give Rule

How to teach your child financial responsibility is about more than teaching them the value of money. You should also show them how they can make a difference by giving back.

The save, spend, and give rule is a simple but effective way to transmit positive values. It’s a rule that will help you raise kind and thankful children.
  • Your child should spend 50% of what they earn on a mix of things they want and obligations. You can, for instance, ask your teen to contribute to their car insurance premiums once they start driving.
  • Encourage your child to save 30% toward specific goals, whether it’s a large purchase, a trip, or contributing to their college fund.
  • Help your child give 20% to make a difference, either by making a donation to a non-profit or purchasing essentials for a local homeless shelter.
Open a Bank Account for Your Child

Help your child familiarize themselves with banking tools by opening an account for them. They’ll learn about the basics of banking, such as checking their balance and avoiding overdrafting their account.

Children are comfortable with digital tools, and navigating a banking app should be easy for them. As your child gets older, you can explore other tools and products:
  • If you’re wondering how to raise financially responsible children, you can teach them about investing with Certificate of Deposits (CDs). These low-risk investments have a fixed rate of return.
  • A savings account is another great tool, and you can set up automated transfers to help your child save 30% of their income.
  • Consider a credit card to help your teen start building a credit history.
  • Investment apps with fractional shares and simple interfaces make investing accessible to anyone.

How to Teach Your Child Financial Responsibility with Power Financial Credit Union

It’s is never too soon to teach financial responsibility. At Power Financial Credit Union, we want to help reshape the way children think of savings and money management. While also offering parents an easier way to teach their kids about finances. Our Youth Accounts are the perfect way to start your kids on the road to financial success. Get in touch with us to learn more about how we help families.