How to Teach a Child Budgeting and Money Responsibility

Teaching a child financial responsibility is of high importance. Contrary to what many parents believe, simply using the right words is not enough for a child to learn to manage his finances effectively. In order for this effort to be a successful one, it is necessary to create a specific, solid plan and follow it to a tee.

How to teach a child budgeting and money responsibility

Be a good example

Simply saying to your child that he needs to develop good spending habits is not enough. In order for your child to be convinced, you need to prove to him that you are a good example to follow.  If you preach about money responsibility and budgeting while giving in to impulse purchases on a regular basis, your child is going to rightfully assume that you do not manage your finances effectively. You need to practise what you preach, if you want your child to take you seriously. If you have told your kid that you deposit a certain amount of money in a savings account every month, let him see you in action to be convinced. If you have told your kid that you do not have enough money to buy that new computer game he wants, do not take it back by buying that computer game two days later.

Give an allowance for chores completed successfully

Get into the habit of giving allowance to your child only for chores completed successfully. This is a great way for your child to understand  that money is the prize you earn for working hard. If you provide your child with an allowance without him doing anything to earn it, then he is never going to understand the importance of working hard. The better the work, the bigger the allowance can be. You can also give a bonus when you see that your child is willing to go the extra mile, and actually do more than what it is asked of him.

Encourage your child to look for special offers and discounts

Another thing you can do to teach your child good spending habits is to encourage him to look for special offers and discounts. Next time you go to the grocery store, ask him to look for special offers and discounts regarding specific items. If he does well, you can gradually increase the amount of items. If he cannot decide between two special offers and discounts, ask him to carefully weigh the pros and cons and make an informed decision.

Let them make mistakes

Mistakes happen so that we can learn from them, and the same rule applies for mistakes concerning budgeting and money responsibility. Let your child make some mistakes so that he can learn from them. If you see that your child has miscalculated and that he has chosen some items that are going to hurt your budget, do not say anything. Let him realise that on his own when the time to pay for those items comes. It might be slightly embarrassing for him at first, but he will learn his lesson and will be more careful next time.

Teaching a child budgeting and money responsibility is a challenge. If you are successful, the rewards will be surprisingly good.