How to raise financially independent children
Making wise money decisions is important at all stages of life, but as a parent, teaching your children how to be smart savers and spenders could make all the difference as they transition to adulthood. Taking the time to apply some of these kid-friendly financial tips can help your child’s future attitude toward spending and saving money. Read on for these kid-friendly financial tips.
7 Tips to raise a financially independent child
Put your kids to work
When I was 9, my parents urged me to get a job delivering newspapers. Try to avoid handing over money to your child without making them earn it. Over time, this can create bad money habits for kids. Making your child get a job teaches independence and responsibility. If she has to work to earn her spending money, she'll think twice before she spends it, creating smarter spending habits.
Give your children an allowance
An allowance is a definite privilege, but it can also be a very beneficial learning tool for kids on how to handle money. If you are unsure what to give, take what you received as a kid and up it by 50 percent: $4 in the 1970s would be worth $6 to $8 now. Again, make sure to set guidelines and explain what the money should be used for, to help teach your kids about money.
Set your kids up with a bank account
Maybe they're earning money from doing chores, a part-time job (for example, a paper route) or receive money from relatives on holidays. Open a joint high-interest savings and checking account so they can begin to earn interest. This is a great way for kids to learn about money and finance. Transfer a bit of starting money to your child's checking account -- this way you are setting a budget while also making them comfortable with ATMs, writing a check, standard banking fees and other money issues kids will have to deal with.
Teach your children about budgets
At a young age, kids don't think about bills, groceries or rent. Not teaching your child how to budget could end up with them living paycheck to paycheck. Work with your children to set a minimum budget to cover the basics like lunch money at school. Whatever they save over their budget can be spent as they please.
Encourage your kids to carry cash
With today's banking technology, it's so easy to stick with plastic. Encourage your children to carry cash. This will help them understand what things really cost, because they will have to hand over the actual dollars and cents. By using a certain amount of cash each week as a personal allowance it will help your children establish a budget and a spending limit. And in case of emergency, having $20 on you is a nice safety net in case your debit card doesn't work.
Do money-related role-play with your children
Don't wait for a bad situation with your children and money to occur. Create role-play situations where they can begin to learn the outcome if certain actions happen. One example: Your child spends his monthly budget before the month ends and asks for more money. Having your children know the outcome before it happens may keep them from blowing through their budget.
Set a good financial example for your kids
Always remember that every child looks up to her parents, and setting a good example is as important as teaching your children how to be financially smart. If you are not managing your own budget or are constantly spending and never saving, you can't really expect your children to be money smart. Teaching your kids about money means showing them as well as telling them.
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