Teaching your children about financial responsibility is one of the most important financial tasks you can take on. In these difficult financial times, there is no time like the present to provide your children with a foundation of frugality and wise spending behaviors. The best way to teach your children financial responsibility is to lead by example. If you have a routine of accumulating debt on your credit cards, your kids will learn from your behavior. If you instead pay off your balances each month, save for big purchases and regularly evaluate your financial goals, your children will model those behaviors.
In the interest of teaching your children responsible habits, do not shelter them from financial discussions in your household. Let them listen to you and your spouse or partner come up with a game plan to save for a vacation or a new car, for example. Let them participate in ways to help save or cut costs when your family needs to do so. With age appropriate explanations, help them understand how much things cost and where the money to pay for them comes from. Providing children with an allowance gives them a great financial foundation. Set up a clear method of earning that allowance though helping with chores and other household duties. Earning an allowance teaches children the value of money and encourages a stronger work ethic. You can help your children save and budget for things they would like to buy and even open a savings account together. It is never too early to provide your kids with lessons about conscientious spending habits and the value of money.
By far, teaching older kids about responsible behaviors with credit cards is the most daunting of all financial lessons. Most financial experts tell parents to educate their children about credit cards, while they are still at home and under their watchful financial eye. Kids often start receiving solicitations for credit cards, while they are still in high school. And when your kids head to college, they will be inundated with ads for credit cards catering to students. Teach your children about credit cards early, so they can responsibly face the temptations of those offers and will understand how to manage their finances. Some parents introduce the concept of credit cards to their children by starting with a debit card. Since a debit card deducts the payment immediately from a bank account, it reinforces the idea that every person is accountable for what they spend. Some parents give their teenagers credit cards with the caveat that all statements be reviewed together each month. The purchases made on those credit cards must be paid in full each month. If not handled responsibly, credit cards offer one of the easiest ways to accumulate debt. Teach your children about them early to protect their financial futures.

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by: barrywaters
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