Financial Responsibility at All Ages: Help Your Child Succeed

As parents, there are many life skills we want to teach our children before they head off on their own. The list probably includes skills like driving, doing laundry and being able to cook. But another area your child should learn about is how to be financially responsible.

Although it is an important skill, simply knowing how to balance a checkbook might not prepare children for a solid financial future. And, while you may not want to burden your children with family finances, budgeting is a good way to learn about money management.

According to the National Financial Educators Council, one of the best ways parents can teach financial skills is through example.¹ When your children see you setting and achieving financial milestones, it can actually empower them for their financial future. So, the question is, when is the best time to start including your children in the discussion?

Learning Financial Responsibility Early

Early in their high school career is a great time to start, especially if you currently pay them for weekly chores or they decide to get their first job. A great first step is to teach them about budgeting. WeAreTeachers.com suggests creating a buying plan, starting with a list of 10 items they’d like to buy, then working with them to put together a plan to earn the money to purchase a few of them.² Then, when you help set up their own bank account, they will have a good start on their money management when they venture out after high school. It’s also a good idea to help them set goals. Some ideas could be:

• Buying a first car
• Paying for college tuition

Off to College

Even if you didn’t have the chance to teach your children while they were living at home, you can still help them as they start out into the world. According to Greenlight, three of four teenagers don’t feel confident in their personal finance knowledge and 73% want more personal finance information.³ Sitting down with your children and helping them understand what their budget will need to be can also give you a little more peace of mind while building their confidence in their own personal finances.

Responsibly Entering the Real World

It’s never too late to learn about financial responsibility either. Even if your child is older and makes financial mistakes, help them get back on track by budgeting. This can include long-term goals, such as a down-payment for items like a new car or even a home, or paying off student loans. If they have debt, setting them up with a budget will help them gain control and pay these off, usually more quickly. Start by paying off smaller balances, gradually adding those to the next amount while paying the minimum on anything else. Help keep them motivated by celebrating small wins each time they pay off a debt.

Other areas to consider in their budget include:

• Rainy Day Fund — a set amount of money, usually $1,000, to help when a large repair or anything unexpected is needed
• Retirement — it might only start as a small amount, but the sooner they can start, the more secure they will be
• Family Planning — this can be anything from wedding planning to children

In addition to teaching your children about setting up a budget, it’s equally important to help children understand that mistakes will happen. You’ll be there to help with any missteps and encourage them to take ownership of that and their achievements. Especially for teenagers, responsibility can spill over into other areas of their life and the choices they make. Another important lesson is that a budget isn’t forever. As life changes, their budget will ebb and flow right along with it.

Work Together Toward Financial Responsibility

We usually imitate what our parents directly or indirectly teach us, adding or subtracting as we feel necessary. Teaching your child how to set up a budget doesn’t need to be complicated, and it will help set them up for success in their future. Whether they are 15 or 35, your children will benefit from learning proper money management. By being beside them and letting them know you’re there to support them, you both will feel more confident in their financial future.

Sources

1. How Do Parents Best Teach Their Children Financial Skills? By Example, say Experts, National Financial Educators Council

2. 12 Fun Saving and Budgeting Activities for High School Students, WeAreTeachers.com, Megan DeMatteo and Leslie Jones, June 4, 2019

3. Celebrate Financial Literacy Month With Your Kids and Teens, https://www.greenlightcard.com/blog/celebrate-financial-literacy-month-with-your-kids-and-teens, April 1, 2021

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