One of the most important things that you can teach your child is to be financially responsible.
All it takes is a quick look at the terrible economic condition of the country, the average debt of most families, and the number of restaurants that your community is supporting to see that financial responsibility is rare these days.
An adult that cannot handle money responsibly is in for a rough ride until they learn the lesson the hard way.
It’s easier just to start when they are young.
Many kids seem to feel that they are entitled to an easy ride. They live at home longer or move back in after college and don’t help with expenses, for example.
Maybe a teenager with a part-time job spends all her money on entertainment and then expects her parents to pay for car insurance or other necessities. Once your child starts making money allow her be responsible for some of her own expenses.
Just a generation or two ago it was not unusual for children to work so that they could contribute to the family finances. There isn’t anything wrong with that, despite what our culture seems to think.
If she runs short of money, then allow her to have to go without because she doesn’t have the money to pay for what she wants. Learning it at 17 is a lot easier than learning it at 37.
Take It to the Bank
Go with your teen to open a checking and savings account as soon as he lands that first paper route. Many banks have free student checking accounts. Help him learn how to budget, balance a checkbook, and save for the future.
You can encourage him to save for those large purchases like computers or cars. If possible, tell him that once he has saved up a certain percent of the final cost, you will match his savings to help him achieve his goal more quickly.
Be an Example
Like anything else, your child will look at what you do more than what you say. If you are not responsible with money, it is likely that your child won’t be either.
Look at your life and your financial state objectively. If you need help in learning how to handle money, take a course, talk to financial advisers or other people that you know who seem to handle their finances well.
Learn to live within your means, pay your credit cards off promptly, and say no to frivolous expenses when you can’t afford them.
Kids will almost always copy their parents’ behavior patterns. As they make wise financial choices, their lives ultimately get easier.
Good credit is important. Companies often look at credit history when it is time to hire a new employee, for example. The credit history reflects how responsible that person may be as an employee.
By working with your kids to establish a financially responsible mindset, you can give them an extra edge in their adult lives.