Teaching kids financial responsibility

Even many small children understand that money is important for getting a lot of the things they need and want. However, they often do not know how to handle money in a responsible manner and may be likely to spend it on junk that won’t last long. With these tips, you may be able to teach your child how to handle their money in a mature manner, and even set your children on a path to financial success.

If your child wants a gift, but does not want to wait until their birthday or a holiday, let them do extra chores to work for it.

Maybe your kid is infatuated with superheroes, just saw The Dark Knight and desperately wants to buy a set of Batman themed fun kids pajamas. However, they may not have enough allowance saved up to make the purchase. In cases like this, it may make sense to find extra things they can do around the house. Special tasks, like painting a room, or washing cars are things that even many kids can do, and if you were going to pay someone else to do it, you may as well keep the money in the family.

Window shopping trips vs. purchasing trips

This technique can work especially well for younger children or kids who tend to make impulse buys. You can set a rule that the first trip to a shop carrying what they want to buy is just for researching, rather than purchasing. For example, if your child has been saving up to buy a new bike, making the first trip to the bike store purely for research, may help them avoid spending all of their money on the first bike they see. After they have considered their options, and given the decision some time, they can then come back to the store, and pick the girls bike (or boy’s bike for that matter) that they like. Separating the two trips may help your child decide if it a purchase they really want to make, and prevent them from making impulsive purchases.

Teach negotiation skills

From buying a car to asking for a raise, negotiation skills can be essential to adults, so you may as well teach it to your child early. There is a good chance that sooner or later, your child is going to ask for more money, and this can be a fantastic opportunity to teach them the negotiation skills that they will need later in life.

Also, teach them how to find in-depth information on any task or project they take up to successfully deal with expensive things since they can negotiate better and see if they are getting honest service. You can take practical examples for such lessons; for instance, since your children may get a car in their teenage, you can start with teaching them basics of car functioning, repairs, and maintenance requirements. You can train them to change a flat tire, engine oil, spark plug, car battery, headlights, etc. Moreover, if your kid is a car fanatic, you can ask them to do research on facilities like auto detailing, Ceramic Coating Newcastle, and other modifing options to learn about basic expenses, different service providers, etc. In this way, they can prepare to find resources and solutions that may benefit them later in life.

Rather than simply answering that you will or will not raise their allowance, ask them why they think they should be given more. If they can make compelling arguments for it, it may be worth considering giving them a raise – and if they can’t, then they probably do not really need the extra money anyway.

Host a Yard Sale and Help Your Children Manage It

Yard sales can be a great way to clean up some of the clutter around your house while making some quick cash. By involving your child in the process, they can learn a variety of financial skills. For example, they can get more practice negotiating with people who might be trying to low-ball them on items for sale, learn about depreciation of used goods, and even learn some salesmanship skills. Just make sure you supervise the transactions and are ready to step and advise your child if they need any help.

Let them make mistakes

Almost everyone makes the occasional spending mistake, and these mistakes are an important part of the learning process. For example, your child may have been saving up for a special occasion, such as to see a concert with their friends. However, if at the last minute they spend all of the money on candy and pizza, instead of a concert ticket, don’t just give in and buy them one. Instead, talk to them about how they can budget and take steps to avoid impulse purchases. One of the quickest ways that your kid may learn these lessons is by messing up.

Teaching your child financial responsibility may be a key part of setting them up for success. By following tips like the ones above, you may be able to help your children learn about the best ways to spend, earn, and save money.

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