Instilling a sense of financial responsibility in children may seem like a daunting task, but it is essential if you want them to grow up with a healthy attitude towards money and the skills to manage it wisely.
Schools barely teach students the necessity of saving and leave many of us fending for ourselves as adults. Thus, it is usually up to the parents to start educating their children about good financial management and money habits that will greatly benefit them later in life.
From budgeting and saving to debit cards for kids and teens, these everyday activities are simple yet very effective in teaching children about money.
1. How to Budget
A good way to start teaching your kids how to handle money is by giving them an allowance. Ask them to make a list of all the things they need and want to buy and let them work out how to best spend the money they have.
Since kids nowadays tend to do everything on their phone, it would be a good idea to introduce them to simple budgeting apps, so they can easily keep an eye on their spending.
It doesn’t matter how big or small your kids’ allowance is, it’s better for them to learn how to budget and learn the importance of having a financial plan in place while they’re still living under your roof.
2. Savings Goal Chart
The earlier you foster in your children the habit of saving, the better. This way, they won’t struggle with the idea of regularly setting aside a portion of their income when they’re older — especially for bigger purchases like a car or their first home.
Do your kids receive pocket money or allowance? You can challenge them to save a certain amount or percentage each month. Start with 5% and gradually increase it as they get older.
Also, if there’s something your kid wants, encourage them to save up for it instead of buying it for them. Make a savings goal chart to track their progress and show them that the more they save, the faster they can reach their goal.
3. Extra Money for Extra Chores
While giving children an allowance is a great way to introduce them to budgeting, it would be even better if they earn some of it by doing tasks around the house.
You see, there are two very important things that children need to learn about money: first, that it is a finite resource; second, that it doesn’t grow on trees. When kids have to work for money, like adults do, they’ll be more mindful with how they use it.
BusyKid allows you to easily compensate your children for the additional chores they take on around the house. Our chores app lets you assign a specific amount for each task and transfer money to your kid’s bank account with just a few quick taps on your mobile phone.
4. Part-time Jobs and Side Hustles
When you come to think about it, teenagers have plenty of spare time – especially during school breaks in the spring, summer, and winter.
If your high schooler wants more cash (who doesn’t?), encourage them to find a job instead of giving them money just because you can. Working part-time in a café or the neighborhood grocery store will not only provide them with an income but may also do wonders for their self-esteem.
Still, your kids don’t have to wait until they are old enough for formal employment to find a job. There are several jobs that even middle schoolers can do to earn some extra bucks like mowing lawns, babysitting, or walking the neighbor’s dogs. Those who earn their money are less likely to blow it on frivolous purchases.
5. Conversations About Money
One of the best things you can do when teaching financial literacy to kids is starting a dialogue about money and the importance of saving in your household.
Money should not be a taboo topic. On the contrary, you should use questions, discussions, and topics involving money as an opportunity to emphasize the value of responsible spending and good money management for kids.
There are so many money-related topics that you can discuss as a family like needs vs. wants, short-term and long-term financial goals, and savings habits/strategies. The idea is to let your kids know that you are willing to talk to them about money matters so that they won’t hesitate to come to you for financial advice in the future.
6. Bank Account and Debit Card for Kids
Once children have developed a good grasp of money and the value of saving, it’s time to introduce them to the basics of banking. Have them open a bank account where they can deposit their savings. Encourage them to track the account regularly, so they can see their savings grow every time they put money in. We recommend a bank account that comes with a debit card, so your kids get to experience cashless systems first hand.
The BusyKid Visa® Debit Card for Kids and Teens is a more secure way of introducing cashless payments and spending freedom to children, especially those in their pre-teens and early teenage years.
A lot of kids nowadays are using the BusyKid Spend Card to manage their money, pay for both in-store and online purchases, and access cash from thousands of network ATMs. Parents love it, too, because it utilizes EMV chip technology for safer transactions and instant purchase monitoring.
Safe. Secure. Convenient.
Start your kid’s journey towards financial independence with BusyKid!