Teaching young children financial responsibilities is a very important role of parenting that will affect your child for the rest of his or her adult life. Children who have a better grasp on the concept of how money is earned and how money is spent will surely be smart adult earners and spenders in their future. Many children might just assume that money is abundant and endless, or they may not make the connection between trading hard-earned money for desired products and objects, such as the toys they are asking for. There are a number of simple things a parent can do to instill a realistic value of money upon their children and to teach them a high level of financial responsibility.
Parents can open savings accounts for their children at a local bank. Children can be given small tasks to do for small amounts of money, such as going to get the mail for a dollar, helping put away clean dishes for a few dollars, making their bed for another few dollars, and other similar tasks. Every other week or so, take the child to the bank with his earned money to make a deposit and have a passbook noted with the deposit amount and total account balance.
Encourage this as a pleasant activity, maybe stopping for ice cream on the way home. Money given to the child on holidays and birthdays can be deposited into the savings account as well. Explain to the child how his money is safe and secure, and show him how to check his balance in the passbook, showing him how the balance keeps growing and he keeps having more and more money. As your child hits landmark amounts, say maybe $50, then $100, congratulate the child for saving such a large amount of money and encourage continued savings.
Your child should come to appreciate saving money as a positive activity and one which he looks forward to doing. When your child is older and able to comprehend more of this money-saving process, the balance in his account should be large enough to be impressive to him, encouraging him even more to save a few dollars a week to keep the account growing even larger.
A second part can be added to this savings process that will help teach your child the value of money as it is spent. If your child is wanting something, such as a special toy or treat, you can set a value for the desired object in the form of tasks. For example, if your child wants a particular video game, instead of just buying it for your child and giving the impression that things are free and easily obtained, you can instead have your child work for the item and trade payment for the tasks for credits towards the object – A video game can be worth making his bed 10 times, helping with yard work 2 times, helping put away dishes 5 times, and getting the mail 5 times. When the child who is used to getting small amounts of money for these tasks does these tasks for no money, but after awhile gets the video game instead, the association will be created that you can work for money, and sometimes money is given up for desired objects.
Anything you can do to teach your child that money must be saved and spent wisely will surely help your child be financially responsible in the future, which is a quality that your child will be eternally grateful to you for.