Teaching Our Kids Fiscal Responsibility

Do you remember getting an allowance as a child? I remember my parents forking over the cash but don’t really remember earning it. I also remember that I spent it as fast as I could get it and didn’t learn much about money management along the way.

I wasn’t alone. Many, perhaps most, of the x-generation grew up without a financial clue. Money was a topic our parents considered private and definitely inappropriate dinner conversation. In Home Economics, the closest thing related to economics of any kind was how to write a check! To make matters worse, most of us entered adulthood at a time when credit cards were being handed out like candy. It seems like we didn’t have to have much of an income, no real stability and no ability to repay the debt. This was also about the time that the Internet and online purchasing was just beginning, increasing the ease of making purchases on credit. Most adults I know in my age bracket are only now beginning to struggle out of debt, many have already declared bankruptcy. Those who made it through unscathed seem to have one thing in common: a solid real life money management education.

As a parent who has struggled to learn these lessons and apply them retroactively, I recognize the importance of conveying this information to my children early and often so that, hopefully, they will have the tools necessary to make wise financial choices and avoid debt and bankruptcy as adults.

Parents can help their children learn to manage money by exposing them not just to the spending aspect of money but also the earning and saving aspect of money from an early age:

  • Children who can count to five can start to earn and save. They may not understand the cause and effect clearly for awhile but the foundation can be laid, often times, as young as three years old.
  • Offer your children an allowance, take them to the bank and open them their first savings account, give them small jobs to do that will earn them money and teach them to save a percentage of their income, always.
  • As they grow, incorporate money management education into your family dynamic in fun and educational ways. Play money management board games, buy real or imaginary stock and track how it grows or declines on the Stock Market, discuss credit card debt and interest rates, mortgages and investments.
  • During the pre-teen or teen years, consider sharing the details of your budget and how you created it with your child, teach them to use money management software and how to balance a checkbook, practice what you preach and share your victories and your mistakes with your children.

It is only through exposure that our kids will learn the meaning of fiscal responsibility so that they can carry it into adulthood.