Raising Financially Responsible Kids – What’s The Secret Behind It?

Now more than ever, we should teach our children the right money lessons so that they can avoid all financial disasters that have befallen our generation. With the present economic condition within the nation, it is equally vital to raise financially responsible kids so that they can remain independent about their finances and be successful in their lives. According to a recent survey from Doughman, 81% parents feel that it’s their responsibility to teach their kids about saving and money, but many of the parents actually know the right ways to save money and remain debt free?

After all, through that same survey, it has been found out that 51% of parents give their children an allowance but only 4% among them ask them to deposit that money into the bank. More research from another eminent financial company showed that only 34% of parents taught their children about the basic money skills like balancing and maintaining a check book and only 29% taught them how interest rates on loans and credit card fees work. Are you a parent or is about to be a parent? If answered yes, then it’s time to change your mindset about discussing money with your kids. Although previously parents thought that speaking about money in front of their kids was a taboo. But now time has changed and you have to be vocal about these basic financial topics. Here are some ways in which you can raise fiscally responsible kids.

1. Don’t Hide Financial Facts from them:

When you’re a parent, you should take responsibility for teaching your kids about the financial facts of life. When the family is going through any kind of financial difficulties, you need to be upfront with them and it is equally important to answer their questions about money honestly. Don’t ever assume that they’ll learn about debt or interest rates from school. You should do your duty at home and then leave the rest of the knowledge on their teachers. In fact, very few schools in America allow personal finance lessons.

2. Tell them that Money is Finite:

Teach them the concept that if you don’t have the money, you can’t spend it. So, even for fulfilling your wish of spending money, you need to have money either in your pocket or in your bank account. You should also remember to reflect this fact through your personal spending habits. Don’t charge unnecessary things with your card and say things like “It’s too expensive but I just have to buy it!” Explain how a budget works and you should never forget to follow your budget as if you do so, they will also learn the same.

3. Help them differentiate between want and need:

It’s natural that such concepts will be blurred among the kids but it is entirely your responsibility to explain to younger children the striking difference between wants and needs. Tell them want is something you wish for and something that can be done without. On the other hand, need is something that is your necessity and something you can’t do without. Try not to make them feel discouraged if they can’t own the latest smartphone in the market.

4. Let them make Spending Mistakes:

You should let them work by doing some kind of household chores and projects and then pay them for their work. When you’re out for shopping, take them along with you and ask them to carry their own money and spend it however they liked. This way, not only do they learn money management skills, this also helps them distinguish between a good buy and a bad buy. Unless they know their spending mistakes, they can’t ever rectify themselves. So, let them work, give them money, ask them to spend, make mistakes and then learn from their mistakes.

5. Let them be Familiar with a Bank:

A bank constitutes a very important part of our lives and hence you should teach them nuances about the bank, according to the age of your kid. You must be aware of the grasping capacity of your kid and according to that, tell them small little details about a bank. What is it? Why everyone should have a bank account and so on.

6. Teach them About Debt:

Finally, teach them the consequences of overcharging and overspending. If you borrow money and fail to repay it, this is called debt. Debt can harm your financial records and spoil your credit score too. Hence, you should always try to teach them the impact of debt on our lives. It is not that debt can’t be mended. There are debt consolidation loans and other options to get out of debt but it is better to stay safe than sorry.

So, if you’re a parent who is worried about your kid’s future, follow the above mentioned tips to rear financially responsible children.