by Priscilla Benfield

Created on: April 17, 2009

Financial responsibility is not something you are born with, it is something that you learn. As a parent, there are many responsibilities in raising a child and teaching them about money is an important lesson that needs to be taught.

Start as early as preschool age to give children an idea of what money is. Many children like to play store. Buying them a toy cash register with play money teaches them counting skills as well as the idea of paying for goods. When you are in the grocery store with them point out to them prices of items to make them aware that things cost money.

Allow them to have small chores at home for which they receive a small allowance. Explain to them that they do their assigned chores and receive a weekly allowance just like mom and dad go to work and receive a paycheck. These are small ways to begin explaining finances to children.

Encourage them to save their weekly allowance in a piggy bank. Teaching them that saving money for a rainy day is a good idea. Explain the idea of saving money towards a goal such as buying a wanted video game. If they are impatient, explain to them that they can do extra chores to make extra allowance money.

When they become teenagers they will get a part-time job. This is a great time when they receive their first paycheck to explain taxes to them. I am sure that when they get that first check they will be surprised. It can be an eye-opener but also a good motivator to stay in school. Open a savings account at the bank for them and teach them to pay themselves first by creating a savings plan and then also having some pocket money. Teenagers can do well in school and work a part-time job. Impress upon them that furthering their education will enable them to get a better paying job in the future.

While they are still teenagers, explain how credit cards work. Too many young adults get credit cards without fully understanding the positives and negatives of having credit. It is important to establish your credit but teens need to be taught how not to abuse credit. By this time, hopefully you have instilled in them an understanding of working hard and saving money.

When your teen starts driving share the expenses involved. It is not unreasonable for a teen to save money towards their first car. If anything, earning the money makes you appreciate the car more. When things are handed to you sometimes there isn't a lot of respect for it. Teens need to know that mom and dad can't always be there to pay the bills. It is fine to help but they need to be making an effort.

Sit down with your teen and share your monthly budget with them. Teens don't have an understanding of how much money it takes to run a household. Enlighten them. It is for their own good. Go over your budget and point out to them how much utilities, a mortgage, insurance and other household expenses comes to. Tell them how much money you bring home in your paycheck. You might feel uncomfortable with exposing so much to your teen but they need to see what reality is.

When there a financial problems in a family children don't need to know all the details. You can simply explain to them that you need to watch your expenses at this time. For a teenager you can give a little more information. Teens need to understand that sometimes families struggle.

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