Ways to Teach Kids Financial Responsibility
Kids are often much smarter than we give them credit for. They can understand complex ideas, like finances, if taught to them in a way they can relate to. So how can you, as a parent, teach your children about financial responsibility? It may be easier than you think.
You can teach your children important lessons about financial responsibility by showing them how to properly save, invest, and spend money in their own life. Allowing your child to personally experience the value of money can improve their financial literacy at a young age. That way, once they’re off to college and into the adult world, they’ll appreciate the importance of the lessons they learned as a child.
One great way to save for their future is using Sootchy for a 529 college savings plan that can help your family afford tuition. Our team cares about connecting parents with a 529 college savings plan that can help cover the cost of college and what better way to show your kids a great tool for saving and investing for the future? To start now, download the Sootchy app in the iOS App Store or Google Play Store.
How Can You Teach Your Children Financial Responsibility?
Teaching your child about financial responsibility is a great way to prepare them for the world as an adult. But how can you translate the confusing world of finances into a language your child will understand? By implementing methods of saving, investing, and spending into their life, your child can grow up understanding and applying financial responsibility.
Money tends to burn a hole in a kid’s pocket. They run to the nearest candy shop or toy store as soon as they get their allowance or some cash from a family member. Instead, you can teach your child to save their money, as hopeless as that may seem at times. Try browsing through a catalog to look at the newest toys and clothing. Explain to your child the price of each item and how it will take a few more weeks of saving to purchase those cool shoes or that pretty sweater. Give them options, too. Tell them they can buy a cheaper thing now or buy the item they want after doing a few more chores around the house. Leave the decision up to them, and see what they do.
Kids learn pretty quickly. Even if they decide to buy candy today and forgo buying a new doll tomorrow, they’ll soon realize what could have been. Teaching your child about financial responsibility doesn’t have to be a boring lesson. You can make it a fun, exciting game that results in your child getting the toy they want. When that happens, your child can feel proud of themselves and begin to realize that money has value.
How is a child supposed to understand the concept of investing? All it takes is a little creativity. Say your child has a goal they want to reach. Perhaps they want to take a trip to their favorite amusement park. To achieve that goal, it may take more than a child’s weekly allowance. Consider approaching them with an exciting investment opportunity. The piggy bank becomes stock that your child is investing in. As an example, for every dollar they put in, you can add a quarter. Over time, your child can see that investing some of their money into the piggy bank can actually gain money.
Once the financial goal is met, your child is rewarded with a trip to their favorite amusement park. This activity can teach them that investing can be a smart way to afford what they want. By using some of their money to invest, they can earn more in the future. As noted above, you can introduce the idea of using Sootchy for a 529 college savings plan. As they understand more about investing and learn you’ve been investing your money to pay for their college tuition, they’ll have a greater appreciation because of the lessons you’ve taught them.
Kids learning about the value of money is a necessary lesson on the road to financial responsibility. Let your child purchase the things they want (to some extent) on their own. For example, say they want a sugary snack at the grocery store. Explain to them that it’s not in the family’s budget for that particular trip to the grocery, but if they want it, they’ll have to buy it themselves. Of course, that doesn’t mean you can’t assist them – if something is 10 dollars, you might tell them it’s two dollars – but, the idea is to teach them that things cost money, so if they want it, they will have to be part of the spending process using their own money.
Starting these exercises in your child’s youth can prepare them to be financially responsible as an adult. It can also help your child understand the cost of certain things, like college. Taking the time to teach these lessons throughout your child’s life can help them appreciate the value of money.
Can Kids Learn Financial Responsibility with a 529 Plan?
If you lay the foundation for financial responsibility with children now, they’ll be able to better understand money. As they get older, you can include them in conversations about their future too. College is a massive expense for many families. By starting a 529 college savings plan when they are still young, you can begin to save up to cover the cost of tuition. When they are old enough, discussing saving for college in a 529 college savings plan can be the next step in teaching them about financial responsibility.
Saving, investing, and spending are things a child can understand if taught the right way. These ideas are easily translatable when you discuss using Sootchy for a 529 college savings plan. By introducing them to financial responsibility at a young age, you’re preparing them for more mature conversations about larger sums of money in the future. If they are well-versed in financial responsibility, they’ll be able to understand the significance of saving for college.
Including children in these conversations can help them appreciate the need for the ideas you taught them in their youth. Such conversations show a real-world example of the importance of saving and investing. And by doing so responsibly and over a period of time, parents can help pay for college education for their kids in part because they used Sootchy to establish a 529 college savings plan all those years ago. Kids will not only understand the subtle financial lessons you taught them in their youth, but will be able to understand how they translate into adult life.
Download the Sootchy app to open a 529 college savings plan to start saving today.