Teaching Young Children Financial Responsibility

One reason many people are hesitant to file for bankruptcy is that they fear setting a poor example for their children. They believe that bankruptcy is a way of running away from their financial problems, and they want their children to be better with money.

First, filing for bankruptcy is actually a step to finally confronting your financial difficulties. Second, you can begin teaching your children basic financial literacy so that they can grow up to make sound financial decisions. Below, we offer some tips for how you can go about doing that.

Introduce Your Children to the Concept of Saving

To save, your child needs to have some money coming in. You might wait until your child receives money for his or her birthday, but you could also start with chores. Set realistic chores your child can do by himself and pay him. Don’t call it an “allowance,” which a child can come to expect without putting forward any effort.

Once your child starts earning money, you can begin to introduce the concept of saving. Teach your children to divide money they earn into “savings” and “spend.” Some parents also add “charity.” Talk about toys or other objects your child wants and help them calculate how much they will need to save in order to buy it. So if your child wants a new bike, you do the math to estimate how many weeks it will take.

Start Early

Children as young as 3 or 4 can begin to understand money and spending. You should start teaching them financial responsibility as soon as possible. If you wait until they are teenagers, then they have developed bad habits for almost a decade, which can be hard to unlearn.

Teach the Difference Between “Want” and “Need”

Many adults struggle with this concept, especially after they get their first credit card. All wants suddenly become needs. In a society that celebrates instant gratification, you need your child to learn that he or she can delay buying something that is not essential.

To teach the want/need distinction, point out items at the grocery store and talk with your child about which items are necessary and which are luxuries. Anything for a meal is a necessary item; meanwhile, snacks and treats are luxuries. You can use this technique at a pharmacy—medicine is essential, but magazines are luxuries.

Tax Your Children

Kiplinger has an interesting recommendation: withhold some money from your children and call it a tax. They have a point. It is certainly true that we don’t get to keep everything that we earn. However, you might want to introduce this concept once your child gets a little bit older. A four-year-old might not understand what a tax is, but an eight- or nine-year-old could.

Introduce the concept of tax by withholding a percentage as a contribution to a family vacation. In this way, your children will see that they will need to contribute to the public good.

Plantation Bankruptcy Attorneys

If you are struggling with too much debt, you should consider filing for bankruptcy. One of the Plantation bankruptcy attorneys at Nowack & Olson can help you analyze what is the best step for you.

To schedule a free consultation, call 888-813-4737.

Resource:

kiplinger.com/article/saving/T065-C032-S014-teach-your-children-financial-responsibility.html

https://www.floridabankruptcynow.com/new-bill-to-limit-credit-card-interest-rates/