As is the case in nearly every area of life, most of us cannot fully understand anything until we have experienced it firsthand. Many people do not become expert budgeters until some harsh realities of financial life hit them in the face.
Even those with responsible parents, who tried to instill valuable money wisdom and pontificated on the value of a dollar, probably did not really get it until they had real reasons to become more budget-conscious. As shown in definitive terms on cpiinflationcalculator.com, the value of a dollar has decreased significantly since our own informative years, but the importance of sound financial teachings never will. The days of doing chores for a small allowance and avoiding the temptations of the arcade are in the past, and the steps you can take today will help better prepare your children for financial responsibility at an early age.
Few life lessons will be more valuable than those of financial responsibility
While nothing you do can really keep your kids from spending money on candy or your teenagers from blowing money on things they don’t need, you can provide them a valuable early education on how to earn, save and budget responsibly. Teach them how to spend money, help them avoid major mistakes and prepare them for responsible adulthood.
1. Explain the basics of money
Your six-year-old is unlikely to grasp the concept of money as a societal determiner for the value of things, but he or she can learn the basics of how money works. Your child should be able to understand that money is something they can use in exchange for the things that they want. Teach them about how you work to earn money and then give examples of all the things you need to spend that money on.
2. Provide everyday examples
One way to help your child understand the value of a dollar is by labeling things around the house with price tags. You can show your child that a pencil costs $.50 while a small toy costs $5 and a book may cost $15. By choosing things your child is familiar with, you can help them better grasp the value of a dollar, which will be a key element towards learning financial responsibility.
3. Give an allowance
While providing verbal lessons and visual aids can help your child learn the basics of how money works, the best way for them to fully understand these concepts is to let them use it for themselves. For this to happen, your child will need some money of their own. While many of us are familiar with the old chores-for-allowance technique, modern experts have stated that this may not be beneficial. Your child should do household chores just as part of being for the family, and directly tying it to a financial reward can send the wrong message.
4. Let the mistakes happen
Once your child has money, your child is going to want to spend money, and in the beginning, it might be helpful to let them make their own mistakes. You should obviously provide the traditional parental advice, but if they are determined to blow the money on candy and small trinkets – instead of putting it together for something worthwhile – your child may learn best by making this mistake. However, if you cave in to the inevitable begging and still buy the bigger item they wanted anyway, you will have defeated the purpose of the entire enterprise.
5. Allow them to watch their money grow
Visuals are very important for young children. Your youngster may not get the most out of financial lessons if you simply hold onto their money or put it in a safe spot for them. You should allow them to keep and save money for themselves, teaching them to be responsible and helping them learn how to treat something valuable. You should also provide a clear container – as opposed to a traditional piggy bank – so that they can actually see their money add up.
While these are only the beginning steps in learning financial responsibility, verbally explaining how money works, providing visual tools and helping your child experience money management will put them on the right track towards being a financially sound adult.
