6 Thoughts on Raising Financially Responsible Children

posted under money by Kalyn Cybulski

A very valuable question has been posed over at the wpersonalfinance network - what are some steps that we (as parents or as a society) should teach our youth in order to help raise financially responsible children?

All six of these thoughts can be applied to an adult's spending habits and views on money; however, the earlier we begin to implement these ideas, the better they will stick and the less negative behaviour we will exhibit when spending or saving our money. The best way to ensure that your child abides by these financial rules is to make them standard throughout your nuclear family. Children are very receptive and will pick up on your money habits - positive and negative - whether or not you make an effort to actually teach them to your child.

We could all do well by following some financial guidelines. Here are six rules I believe that every child should be taught:

Money is Not the Be-All and End-All. Children raised in a world where money can buy them happiness, freedom, success and friendship will not be responsible children. We should teach our youth that a dollar value is not attached to all things - whether this means planning some free family activities or encouraging our children to donate their money to someone who "needs it more". Children who grow up with the realization that they are responsible and accountable for their actions and goals, while making money a less-important factor in their life, will end up being more industrious and less attached to their pocketbook.
Only Spend What You Have. If we followed this rule from birth, there would be no debt and there would be no bad credit. Simply put, teach your children to only spend what they can afford at that moment - if they cannot afford it, the concept of saving can go a long way. This will teach children to avoid relying on money from other sources - be they personal loans or credit cards. A solid foundation of the concept of money will pay your child back tenfold.
Delay Gratification. I distinctly remember going to the store and buying bags of penny candy after school, then being left with a less-than-stellar remaining budget for school field trips and book fairs. If I had learned the concept of delayed gratification, I could have put my immediate desires aside in order to afford a more substantial future goal. Children who learn this will be able to resist temporary temptation (those new jeans at the mall) in order to afford something much more important to them - a car, college tuition, a wedding, etc.
Quality over Quantity. Buying ten new winter jackets at $50 for ten years is a $500 investment. Buying two winter jackets that cost $150 each and last 5 years apiece is a $300 investment; meaning you save $200 in 10 years. This may not seem like a lot, but the principle is what matters - buying things that you research, hem-and-haw or dig around about can save you a few precious pennies, even if the initial cost is higher. A proper savings plan and utilized delayed gratification can make this work, and can teach your children to focus on a higher quality of product instead of the easiest answer for the short term.
Pay Yourself. One financial lesson that my father taught me quite early was to always pay yourself along with your regular bills for other people. This does not mean paying down any debts or paying off your credit card; paying yourself means putting money aside for your spending and your saving purposes. Teaching your children to put 10% of their allowance/wages/birthday money in a savings account will help encourage delayed gratification and show them how easy it is to support the idea of a financial buffer in case you need to buy something you cannot normally afford or in the event of an emergency situation.
Shop Smart. My boyfriend likes to call this section "It's Only a Bargain if You Planned on Buying it Anyway", which contradicted my old way of thinking about shopping. Include your children in comparison and sale shopping as soon as possible, starting with a well-planned shopping list and ending with the balancing of your chequebook or bank account. A child who shops smart will be able to avoid impulse purchases, plan their shopping trips and stick to a prescribed budget with little effort.