Many young adults make bad decisions once they get out on their own. These mistakes are often financial mistakes – like wracking up a lot of credit card debt.
If you want your kids to do better, you need to teach kids to become financially independent. Whether you hire your kids to do work or give teens free reign to cover their own expenses, you can teach your kids to do better with money.
Hire Your Kids for Jobs Around the House
First things first. One way to teach your kids to be financially independent is to teach them how to earn an income. Instead of giving your kids an allowance, let them do chores to earn money. They can then use this money however they want. Chances are your kids will quickly learn to be more careful with money once they see how hard it is to earn.
Explain Why Saving Money for the Future Is Important
Sit your kids down and talk to them about the future. The type of discussion you have will depend on the age of your kids. For example, with smaller kids you might talk about saving money to buy toys they want. If you have older kids you might talk to them about the importance of getting an early start on saving for a car, college, or retirement and how starting ASAP can benefit them.
Teach Kids How to Save Money
You want to show your kids different ways they can save money. Explain to your kids that saving money here and there can give them more money to spend on other things. For example, if a toy is $5 at one place but $3 somewhere else, explain to them that will leave $2 to buy something else or save for later. You also need to talk to your kids about saving money for future purchases and how important it is.
Let Them Make Financial Decisions
You want to let your kids make decisions with their money. Kids need to learn that some decisions are bad and some are good. Don’t step in the way when they start to spend their money on something that is poor quality. They have to learn from their mistakes.
Give Teens Money to Spend on Expenses
Last, but not least, instead of paying for your kids clothing, lunches, gas, etc – give them the money needed for their living expenses and let them handle those expenses. Explain to them that if they waste all their gas driving around with friends that they’ll be taking the bus to school. You will not be giving them more money. It can be scary to watch them the first couple weeks, but they’ll eventually get the hang of it and it’s a great learning experience.
Instead of taking me to the mall and buying my school clothes for the year, my parents gave my sister and I a clothing budget. We quickly learned that shopping the clearance racks rather than the full-priced racks at the front of the store would help us buy lot more clothing with the money we had to spend. I feel like it was one of the most important things my parents did to teach us about money!
Your kids don’t have to go into the world unprepared. There are so many things you can do to help them become financially independent.
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