Teaching Your Child Financial Responsibility

A child old enough to know you need money to buy a candy bar is old enough to learn how to be responsible. Giving your child an unrestricted allowance teaches them nothing; they will not learn the value of money until they experience the work of earning it.

A small child was asking for a toy in the store, and when met with the response 'We have no money for that', replied "Then let's go to the bank and buy some money!" Children may not understand that work is required to earn the money in that bank, but this is easily remedied!

As soon as your child is able to take on small chores around the house, you can start letting them earn a little money. Be certain to specify which chores are matter of course (making their bed, cleaning their room and caring for pets) and which are 'paying chores' (lawn care and washing the car).

Don't let them spend all their money, either! Teach your children have a third of it for pocket money, another third can go in an old fashioned 'piggy bank' to save for special things they want and the remainder should go in a savings account in their name that they can later invest to make more money. You also want to teach them the concept of giving and encourage them to give part of their earned money to the poor and to the less privileged.

This will teach them the value of money earned through hard work, and they will appreciate it more! Every purchase will be more carefully considered if they know they have to make a choice between it and another pleasure, and they will learn to make wise and frugal choices.

As your children get older, consider encouraging them to start their own little business, or work for a neighbor or local store. Many children have learned a solid work ethic through taking on small jobs at a young age. If they need equipment or supplies, you can work out a loan schedule to get them started - with a clear plan for repayment.

When they are grown enough for a car, ask them to pay for half of their first car from their own money that they earned through work. This will teach children to be responsible and not take things for granted. It trains them to appreciate and to be grateful. Ask your children pay for part of the maintenance and insurance costs of the car. If they want the privileges that come with driving, they should be willing to support them. A small part time job should not interfere with school and studies, and often diligent work at a summer job can yield enough to cover costs for the year if the money earned is put away for that purpose.

Teaching your child responsibility when it comes to money will stand them in good stead in the years ahead. When they leave home to fend for themselves, you will have given them the tools they need to support themselves, and they should be able to pay their bills and stay out of debt.