Seven Ways to Teach Your Kids Fiscal Responsibility Waterville ME

The old saying “I wish I knew then what I know now” haunts many people for various reasons. This adage is particularly haunting in the world of investing, where fortunes can be made or lost based on a few choice decisions (or indecisions). One of the greatest regrets many investors have is that they did not begin thinking seriously about money until later in life. Some don’t even get their first taste of fiscal responsibility until they are young professionals setting up their 401(k)’s. Even then, the act of consciously saving and physically choosing an investment vehicle may be years, if not decades, away.

Though you can’t go back in time to begin investing at an earlier age, you can set your children up for a bright investment future. In fact, children as young as five can become financially literate through a little hard work and consistency on your part, and a little trial and error on their parts. Below are a few rules that can open the dialogue about money, saving and investing.

1) Trust Your Kids with Money

Children are, by nature, visual learners, which is why it is important they be allowed to interact with money at an early age.
The easiest way to do this is to give your child an allowance. Some experts recommend that the allowance be equal to the child’s age (a five-year-old would receive a $5 allowance, and so forth), while others believe it should be based upon one’s behavior, accomplishments or chores. Though there’s no right way to give your child an allowance, the important thing is that the allowance comes consistently. Therefore, if you’re supposed to give a seven-year-old $7 on Sunday night, then do it every Sunday night. If you promised to give your 12-year-old $10 after he washed your car, be sure you’ve got the money on you when he’s finished. Without the follow through, it’s difficult for young children to associate money with value because they cannot predict why it is granted sometimes after a job well done or at a week’s end and not other times.

2) Allow Them to Prioritize Their Expenditures

An allowance can be a fun way for a child to gain some independence and practice her decision-making ability. However, it is also a way to teach responsibility. Before a child can become a savvy investor she needs to become a savvy saver. A good way to do this is to scale back slightly on how much money you spend on your kids. Explain to them that as they get older they are given more responsibilities, both with money and with chores. Also explain that now that they have their own money they will have to decide what to spend it on. If you’re no longer funding your 12-year-old’s Friday movie nights with friends then she may have to think twice about whether she wants to forfeit this tradition in favor of the lip glosses that she (read: you) compulsively buys.

“You’ve got to give them the money tools and then m...

Click here to read the rest of this article from NuWire Investor