As a parent it is hard to know how soon to introduce your children to responsibility, especially when it comes to money management. While many say it is never too early, it is agreed that too late and you may end up with a college graduate living in the basement with little or no money sense.
According to the Pew Research Centre, in 2013 almost 40% of Millennials still receive financial support from their parents. This compares to 20% of 20 something’s in 1960. It doesn’t matter how we arrived at this situation but shows the importance of teaching children the importance of a dollar.
Families that teach budgeting to their children can expect to gradually increase responsibility as the child grows. A good way to start is with allowance paid in cash. Set the terms for the receipt of the allowance and help the child manage the money either with envelopes or jars that clearly indicate how to divide the allowance into spending and saving. Give the child an opportunity to earn more allowance by doing extra chores or assisting friends and neighbours with small jobs.
Here are five recommendations to encourage children and teens to think about their money and responsibility:
- Open a bank account. Having your child interact with their money in a professional setting encourages responsibility and the deposit book allows them to track their savings. As they reach their goals reward them.
- Take them shopping. Participating in the weekly grocery shopping provides valuable lessons on budgeting and understanding the difference between a regular priced item and a sales item. This helps create value in their purchase and to solve problems.
- Find employment. A part-time job is a win/win situation for parents of teenagers whose needs and wants increase as they become more aware of the world and its opportunities. Work with your teenager to create a budget for spending, saving towards a large purchase, general savings, and possibly charitable giving.
- Hold them accountable. A child who is saving towards a special purchase that gives into the temptation of a splurge purchase will not learn the value of a dollar if bailed out. If it is possible for them to un-do the purchase, such as in a clothing or game purchase, allow them follow through themselves. A lesson in understanding the consequences of impulses is important.
- Assign a purchasing project. Whether it is a pizza party or an afternoon at the go-cart park, working with your child from beginning to end is a great teaching and bonding activity. Assist with calculating out the cost of the project, where the money will come from, and how it will be spent, to ensure a fun time for all.
- Raising children that understand money and its value involves giving them responsibility at a young age. As children grow, increase the fiscal responsibility and help prepare them for life in the real world.