A lot of times, parents tell their children that money does not grow on trees. But most kids really do not understand how money comes to their parent's bank accounts until they grow older and start earning for their own.
Parents should teach their children financial responsibility. This is one of the most important skills for the children of any age. The lesson may change as they grow, but the message remains the same: "Money is not free. Hard work pays off," according to Democrat and Chronicle.
Parents should explain to their children how the money gets into their bank. The children should understand that it is not as easy as pushing few buttons from the ATM. Learning where the money came from is important as well as saving and managing it.
A trip to the grocery store is a good way of teaching kids how to budget their money. Younger kids can get jars where they can keep their money and divide it for saving, sharing and spending.
Use pictures to visualize what they want to do with their money. They should understand how long it will take to save up for the things they want to buy.
Parents should also teach them ways on how to earn money like saving something from their school allowance or offer them some money for doing household chores.
Paul Richard, an executive director of the Institute of Consumer Financial Education says that parents should set goals for their children whenever they ask for something they want. An article from Education.com says that saving for something that a child wants to buy is the best way to motivate them to become responsible for money.
Richard stresses the importance of learning about saving for long-term goals as the children get older. They should be introduced to having their own bank accounts where they can track their savings.
How the parents manage their money reflects to their child. So they must be a good role model if they want their children to be financially responsible.
