All parents who want their children to be successful and happy in lives teach everything to their wards early in their lives but it is often unfortunate that they don’t do so with the money talk. A lot of parents wait till their children get through college or high school to begin talking about handling money and personal finances. As a result most of the young adults today start their financial careers on a wobbly foot. So it is vital to note that just as everything else teaching personal finance to children should also begin early.
These three tips could be of help to introduce and teach children about financial independence.
1. Introduce them to handling money with simple examples to start with. Talking to them about the meaning of having some set financial goals is very efficient and beneficial. Assist them in creating financial plans and paths to achieve their plans. Give them a basic definition of incomes, expenses, budgets and cash flows etc. talk to them about the various monetary lifestyles and the expenses associated with each. Paint a picture for them on the expenses of a family and an education. Give them guidelines on how financial decisions are made, what the terms credit and debit mean and the acceptable limits for the two. Introduce to and explain the importance of building their savings.
2. Make use of tools of money management and increase financial responsibility on children gradually. Start by giving a weekly or monthly allowance to elementary school children upon completing household chores. For children in middle school and high school introduction to a budget is helpful. A budget teaches them how to put their resources to best. It teaches them to recognize their limitations and live within them. It also teaches them the basic concepts of cash flow. Ask them to prepare a projected budget by accounting for their allowances and their expenditure each month. Check with them on how close they have managed to stay to their estimated budget and if they have over spent ask them to come up with ways to cut costs for the coming month. As for teenagers, a checking account with a debit card is an effective training tool. They can spend only on existing funds and these funds can be regulated by the parents.
3. Place confidence in them when it comes to them earning money. Encourage children to take up any kind of part time jobs like babysitting, mowing grass, shoveling snow or working for a business. They will learn what it is to earn for themselves and the power they can afford from it. Make them responsible for any one of their expenses like clothing. Do not give them credit cards unless absolutely sure they are capable enough of handling money. Make it a rule with them to buy on credit only as much as they can settle at the end of the month.
Most of all children learn from parents so be a responsible adult fiscally so that your children have a role model to watch and learn from.