One of the most common stories we hear at this time is from adults who learned all too late how to be financially responsible. They often learn after having to rebuild their credit because of unwise decisions. I can raise my hand and say I’ve been there too. It takes a moment to demolish it, and what seems like forever to rebuild it.
I often hear people say they were never taught how to be financially responsible when they were growing up, and they had to learn this important skill well into adulthood. Our financial responsibility or irresponsibility can often cause turmoil in our relationships and personal lives. Think about it, when searching for a partner, bad credit is one of those things that will make you run. No one wants to spend their relationship struggling financially, and trying to rectify poor decisions of the past.
As parents, our job is to educate our children as early as possible on financial responsibility, among many other things. How do we do that? There are many different ways, so I’ll share with you what we do to teach our children.
Right now our children are 8, and 5 almost 6. They both have weekly chores that they must get done. For our 8 year old daughter, her main chore is her bedroom. However, she also empties the bathroom garbage cans, and helps with laundry. For our son, his main chore is his bedroom (which he tries to hide everything under his bed). He also helps with putting away folded laundry, wiping down surfaces. When they do their weekly chores, they get their allowance, which is $5/week for our daughter, and $3 for our son.
Of course to them this seems like a lot of money. Truth be told, they lack nothing, so most of what they decide to do with their money is save it. I bought the both of them a piggy bank with their favorite character. They both keep track of how much money they deposit into it. When they decide there is something they want to buy, we weigh the cost, and how much it will leave them with. More often than not, they decide against buying something of little to no use when they see how much money it will cost, and how much it will leave them with.
I don’t do this to deter them from buying things. In fact, I do this to teach them the value of what we spend our money on. Can you get a better deal somewhere else? Is it worth the money that they are asking for it? Will you still want to use in 1 week? 1 month?
These may be mature concepts for children so young, but we believe it’s never too early to start teaching them. Sometimes I’ll bring them to the dollar store and give them both a limit of $5 to get whatever they want. As insignificant as we think this is, they absolutely love it. We’ve even done this with their money.
My daughter decided she wanted to start a business, so right now she is saving for the cost of the products, materials, etc. She doesn’t know that as her parents, we’ve decided to invest in her business, so she can hold on to her money. We want them to be willing to make the sacrifice for what’s important, be willing to invest in themselves, and learn what to spend money on, and how to spend money wisely.
We teach them about credit and APR, and how bad those first credit card offers can be when they hit 18. Yes, that seems like a long time away, but if we can get the concept rooted early, and then just have to revisit it through the years as they mature, they will have a foundation of knowledge in this area. This can prevent them from making many of the fiscally irresponsible mistakes many of us have made.
So tell me, what ways do you teach your children to be financially responsible? Have you started yet? What works for your family?