Helping Kids Learn Financial Responsibility
Childhood is a time to learn, explore, have fun, and enjoy the freedom of having very few responsibilities. When it comes to matters of money and finance, kids often have few worries. Unfortunately, this carefree attitude often lasts well into a person’s early twenties, and before they know it, they are in dire straits financially. If you are a parent with a young child and you want to start them on a path of being financially aware, it is never too early to start. While you may have a financial advisor Colorado or a financial planner Colorado to help you with your planning strategy, kids rely on you to guide them. While there is no need to worry them with retirement plans or big investment schemes, it is important that you help them be aware of money and help them understand the importance of budgeting and saving. There are numerous ways to do this, regardless of the age of your child.
Kids need basic lessons when it comes to money and no lesson is more basic than how to save. If your child is given an allowance, help them understand why it is important not to spend every penny of it immediately. A great way to do this is by showing them the rewards of saving. Settle on an amount of allowance each week for the child. Explain to them how much they are getting, but also keep aside a portion of that for savings. You are in control of the savings initially and it may take a few weeks for your child to understand that while the money becomes theirs, it will not be all at their disposal. At the end of a set period of time, present them with the savings and allow them to spend it. This way, your child will truly understand the benefit of saving in action, as opposed to just saving because it sounds like a good thing to do. Getting a windfall will encourage them to save on their own in the future.
You can also help your child spend smart without being cheap. When shopping, guide your child into purchasing higher quality products so they learn that it is good to not always look for the lowest price. Help them find options when they shop, even if it is just for toys. Explain the benefits to waiting for sales, and the benefit of investing in higher quality for more money.
Kids should also understand how banking works before they open a checking or savings account. Work with them so they understand fees and so they realize a bank is a business looking to make money. Help them avoid unnecessary fees by teaching them responsibility.
Finally, make learning about money fun for young kids. Children learn through dramatic play, so if they are able to act out scenarios involving money, it will help them process what you are telling them. Supply them with toy cash registers, receipt books, budget manuals, and play money. Kids who engage in play involving money will understand how the exchange system works and they will be able to function better later in life when the exchange of goods and services for money is no longer a game.