5 Ways To Teach Kids How To Avoid Bankruptcy As Adults

Learning to handle funds responsibly is part of growing up. Unfortunately, it is not something usually taught in schools which means it falls to parents to teach their children how to do so. Here are a few suggestions you might want to consider.

Put your kids on an allowance (whether you make them work to earn the allowance or not is a separate debate). As they grow older, allow them to be responsible for buying their own shoes, then all of their clothing etc. Naturally, your kids will make some mistakes as they go but they will learn from those mistakes. They will learn how to budget, how to save for what they want and best of all, they won't be coming to you on Friday night asking for money to go out because by the time they reach high school, they will have those budgeting tools in place and will be able to cover their own expenses.

1. Take them shopping with you and make sure they understand the prices of what they are buying. Take them when you buy groceries for the week and show them the total bill for groceries for the family. Teach them not only how much a loaf of bread costs, but not how much it costs to feed a family for an entire week.
2. Show them the costs of running the entire household. This is related to what we discussed with grocery shopping but it’s one thing to know what a tank of gas costs, it is quite another thing to know what it costs to pay the bills for an entire family. Suddenly that $8.00 an hour job doesn't seem nearly as attractive as it otherwise might when they realise they might have to live on that paycheque.
3. Set an example by saving and let them know you are doing it. Whether you follow the traditional rule of thumb of saving 10% of your income ("Pay Yourself First") or some other formula, let them know what you are saving, why you are saving and how it is going - in an age appropriate way, of course.
4. Finally, talk to them about money. I know, many parents would probably rather have the birds and bees talk than a discussion about money but it’s really important to their financial development. Managing one's finances is key to having a good life in today’s financial landscape. If you have never tracked the family expenses start now, you can learn together with the kids as you do it. Tell them what the entertainment budget for the month is and involve them in the discussions. For example, “should we go for a trip to the beach on the weekend or stay home and rent a movie and have pizza?” Let them know the costs of both choices.

It’s not easy to do, but if you manage to teach your kids to be responsible with money, your life will be easier too as you will decrease the chances of your children still asking for money when they are 33 years old.