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How to Teach Children Financial Responsibility - If you believe that it is too early to begin teaching your children about financial responsibility, you are mistaken. It is never too early. The earlier a habit is implemented, the better it will work. 

Raising financially responsible children has its own set of advantages. From a very young age, your child learns the value of money. Raising children with such knowledge not only increases their awareness of money and its value but it also increases their confidence. One of the best things you can do for your children is talk about money.
Source: by Jordan Rowland

Ron Lieber writes in his excellent book, The  Opposite of Spoiled: Raising Children Who Are Grounded, Generous, and Money Smart, that "every conversation about money is also about values." Patience is also a requirement for allowance. It is about being generous when you give. Perseverance is required for work."

The connotations around money range from greed, to shame, and even disgust. This is usually the reason why most families don’t openly discuss money. If you’re growing your financial wealth, it is imperative that you teach your children about the value and importance of money.  

There’s no point in building wealth only to leave it in the hands of an uneducated generation. Teaching your children about  money is one of the most valuable lessons you can give your children; it’s the best way to get them ready for the ‘real world’.


According to a Wells Fargo survey about saving habits, 71% of the adults responded by saying that they learned the value of saving through their parents.  

With this being said, only one-third of today’s  parents (approximately 36%) report discussing the importance of saving money with their children on a regular basis. A whopping 64% said that they talk about it less than once a week – sometimes never.

A fun way to teach your kids about saving is by giving them an allowance. Tell them they can either save or spend this money as this please – but with a catch, of course. If there’s a friend’s birthday coming up, for example, tell them that they’ll have to save  up their own money for the gift.

Encourage them to make money outside of their allowance. This could include giving them a bonus for extra work around the house, helping  them find a summer job or even a part-time job.  

Starting their own mini-business is a  fantastic way to get their business mind up-and running – lemonade stands are always a crowd pleaser at the height of summer.

Saving money is a rewarding experience in and of itself, but it is also a habit that has a  significant impact on a child's thinking.

Money management teaches: 1) Patience and perseverance: Good things come to those who wait—and save! 2) Priorities: "Would you rather buy the $5 toy or put $5 towards a new bike?" 3) Financial self-control: Discipline and delayed gratification lead to success. 4) Resourcefulness: "Would you rather have the bike or a new iPhone now?" What could you do to earn or save more money?"

While whole life insurance is excellent for long-term savings, we should not use policy loans for minor purchases that can be saved for separately.  

This is an important lesson you should teach your kids. Consider a money jar, envelope, or even separate savings account for short-term savings (just make sure there are no monthly fees).


The authors of “The Cycle of the Gift: Family  Wealth and Wisdom” stress the importance of allowing children to "pay their dues" and forge their own paths in life. For example, hiring a child for positions in family businesses for which they are not qualified is not a good thing. It is sometimes preferable to let them gain experience somewhere else first. 

When children of any age are repeatedly rescued, subsidized, or promoted without earning it, they lose the ability and  confidence to help themselves.  

They frequently live beyond their means because they lack a clear sense of responsibility or the value they bring to the market. And they will continue to return to the "Bank of Mom" (or Dad) for their next financial fix.

According to Thomas Stanley, author of “The Millionaire Next Door”, “The Millionaire Mind”, and other books, such financial gifts are "economic outpatient care," and they usually backfire.

The more a child is given, the less likely they  are to save and the less financially responsible they become. The fundamental lesson that Stanley emphasizes throughout his books is that if we want our children to be self-sufficient, we must stop supporting them when they don’t require it.


Getting your child involved in ‘adult tasks’ is  a fun way to teach them about the value of money. Here’s a great way to do this: The next time you go to the grocery store, hand your child a small sum of money and then  tell them they can pick an item or two which fall under this ‘budget’.

Then encourage them to pay for it themselves at the till. They learn how to handle money and also feel a sense of pride when they accomplish an ‘adult task’. 


Taxation is a complex concept that even many adults don’t understand. Teaching your children this concept from an early age is crucial. You can do this by explaining the purpose of taxation.  

For example, every time you give your child  some money, tell them that you will deduct a small amount and deposit it in the bank. In a sense, this money is the ‘tax’ that (in the real world) would be paid to the government.

Not only are you teaching them about taxation, because the money is going into a bank account, you are also helping them build their savings. It is up to you when you’d like to tell your child about the savings and ensure they treat it wisely.


The Save-Spend-Share model reflects what most  people would do with their hard-earned money or bank accounts. Prepare three glass jars or tin cans and label one with Save, the second with Spend, and the third with Save, to make the practice more interesting for your child. 

Next, Inform your child about the concept: The save jar contains funds set aside for a large or expensive purchase that they desire,  such as a PlayStation or a bicycle. As a reward for their hard work, they have money in  the Spend jar to spend as they please.

The Share jar contains funds that your child  will donate to his or her chosen charity. This is a great way to teach your child about philanthropy and the value of sharing his blessings with those who are less fortunate. 

Decide on the percentage that should go into  each jar after discussing it with your child. These creative and fun ways of teaching  your child about financial responsibility will help instil the value of money in them from an early age.


Talking about finances can sometimes bore adults, so no doubt children might get fed up with it. This is where technology saves the day. There are a lot of educational and entertaining games that children can play to learn about finances.  

There are also helpful apps. If, say, your child  is having a hard time writing down how much money they’re making with each chore, they can use  apps which can do the calculations for them.

After you’ve talked to them about the basics of finance, allow them to use these apps and games to really apply the knowledge they’ve been given.


Give your children the opportunities to make age-appropriate financial decisions around the house. As they grow older, give them bigger responsibilities.

This will teach them money management before their time – this ensures that they know exactly what financial responsibility  feels like before their first paycheck.

Why is this important? So that they aren’t  clueless and don’t mindlessly spend their money. Appoint your child to the board of directors of the family foundation! Make it fun and exciting. 

The key here is to respect your children’s  choices. Even if they differ from yours, take into account that they are still in the learning process. While yes there are right and wrong answers, politely guide them towards the desired results.


Children with successful parents frequently  have a disproportionate fear of failure. While their parents' willingness to take risks is  likely to have contributed to their success, their children may be afraid of not living up to their  parents' examples and, as a result, do whatever they can to avoid being perceived as making a mistake. This fear of failure can be detrimental.  

It makes children less likely to try new things  or take on tasks that are difficult for them. It may also help to explain why children from  affluent families have higher rates of anxiety. When failing isn't an option, every action becomes a high-stakes test.

In some cases, parents worsen the problem by intervening to protect their children from the consequences of poor decisions. However, while this may benefit their children in the short run, it reinforces risk-aversion tendencies in the long run. Furthermore, research has linked over-involved parenting to higher rates of childhood depression and anxiety.


Budgeting is a crucial financial concept. You  must be able to track your income and expenses in order to grow your wealth. Saving, investing, and even charity are all contingent on the budget. There are a variety of age-appropriate methods for teaching a child to budget.  

However, creating envelopes labelled "save,"  "spend," and "give" is the best method. When your child receives money, have them divide it evenly among these three categories. You can work with them to develop more specific ratios as they get older (such as 50% save, 40% spend, and 10% give)


Your children are looking up to you at the  end of the day. The most important thing  you can do is set a good example. If you're  encouraging them to work hard, save money, and avoid unnecessary purchases, make sure you're doing the same.  

They will learn far more by watching you than they will by listening to you. You will give your children a huge advantage over their peers if you can teach them basic financial skills before they grow up and  leave the house.

Not only will they be more likely to earn more over their lifetime, but they will also be able to avoid the stupid mistakes that hold so many young adults  back in their twenties and thirties back.


"No" is one of the most important words a parent must learn. As children begin to grasp the concept of ownership, they must also be taught  that they cannot have everything they desire.

Many parents struggle with this because  they want to provide for their children, and it is tempting to spoil them because you love them so much. You will, however, raise a far better person if you teach them that they cannot have everything and must prioritize their desires based on factors such as time and money. This concept instils scarcity as well as discipline.

Well, parents, I do hope these points help you out. With that said, have a great day, and see you in the next one.

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