5 Ways to Teach Your Kids About Financial Responsibility

Financial responsibility and kids might not sound like an easy conversation at first hand. But, does it have to be as painstaking as it seems? One way to ease the conversation about responsibility with kids is by visiting online sources for parenting like the motherhoodcommunity page, which can provide helpful tips and resources.

While the first thought might be just to whip out a good old piggy bank to throw in some occasional change at the end of the day, we can think of a few fail-proof ways to make this endeavor a smooth ride that will have your kids set up for financial success in the long run.

Luckily, nowadays you also have reliable technology on your side. This is the perfect modern parenting hack - tried and true cards/apps that allow you to safely teach money management methods to your kids while having them do their household chores. It is now easier than ever to teach your kids about financial responsibility in a mess-free way.

Why do saving habits matter? 

Contrary to the idea that saving habits are a complex concept of adult life, children can also be taught good financial habits from their early days. These habits often become staple behavior which is why creating a healthy habit with money should not be overlooked.

Some experts state that good savings habits are created as early as the age of seven. This, of course, doesn’t mean that new behavior can’t be taught at a later stage. However, what this does is points out the seriousness of starting good practices even in early childhood.

As it turns out, it is never too early to have quality conversations about money management. 

Helping kids understand money

Money comes off as an abstract concept at first, especially for children. But, bringing it to life for proper understanding is possible without falling into the usual traps. 

Forget about big words like mortgages, stocks, and economy. Perhaps skip history lessons on economic crashes and the importance of being prepared for them too. This will not only create unnecessary confusion but also an aversion to an already complex topic, to begin with. 

All of these conversations can come at a later stage. Instead, consider steering the conversation towards simpler ideas, those that kids can easily imagine and understand. 

5 ways to teach your kids about financial responsibility

To provide a good basis for kids to navigate money in their adolescence and adult life as seamlessly as possible, there are proven techniques and steps to avoid. 

1. Establish a good financial role model 

Naturally, the primary task in teaching good money habits is having them yourself. Kids will inevitably and subconsciously mimic their parents’ behavior. 

Take a look at your spending habits. Look for cues on what your kids might have already picked up on. Take a look at your budget, necessities, savings, as well as any miscellaneous spending. 

2. Explain the difference between “wants” and “needs”

Help your kids understand the difference between these two concepts. Customize this step to your individual or family budget, as it can greatly vary. 

Teach kids what your basic “needs” are. This includes things like food, rent, healthcare, and education. Then explain that “wants”, like the latest toys or smartphones are vastly different things. Consider a reward system for kids meeting their school obligations or home chores. 

3. Establish small savings goals

There are several ways to make savings goals a lucrative idea for your child. For example, if a child wants to have a new toy or a game, provide them with the incentive to save up for it. 

They can do so by collecting money from allowances. This will teach them saving, as well as patience and financial independence. Additionally, this can be regarded as a semi-long-term investment from a child’s perspective, teaching them a lesson on savings rates.

4. Consider money management apps for parents and kids 

Consider introducing money management apps. Start by looking into reliable card & app platforms like busykid.com, that have real-life and money management benefits merged. 

After all, it should be taken into account that we are living in a highly technological time and that kids, and their money habits, should be well adapted and prepared for it as well. 

5. Leave some room for mistakes 

Learning from failure is just as important as learning from success. Therefore, leave some room for your kids to make small-scale mistakes. 

In turn, this will help children differentiate between good and bad investments in terms of money, and provide real-life knowledge on the importance of good financial behavior.