Money Mondays: Financial Responsibility

This week, we are going to talk about Financial Responsibility. What does it mean? Different people will have different definitions of what it means, and that’s for sure… but, for our purposes…

Financial responsibility means that you are aware of your budget. You keep track of the money you have coming in, along with the money you have going out. Part of being financially responsible means that you are educated about financial information–you are aware of things like credit. You know how to save your money for emergencies, and you are into investing.

Here are some tips you can use to help teach your kids and teens about money.

Open a Savings Account. From the time your child is very young, you should open some sort of savings account for them. Save some funds they get from Christmas, Birthdays, and chores for them without making it known to them for the first few years.

Contribute a portion of allowance or pay to savings each week. Keep adding to that savings account each week, and do your best to keep from touching it. The longer you do this, the better off they will be!

Start an IRA on 18th Birthday The child who saves 5K a year from 18+ will have twice that of the 40+ adult contributing 20K a year! It will provide some great tax advantages too.

Get a Student Credit Card. Several companies have deals for students, that will have low credit limits and interest rates so that your teen may learn about credit, while building his or her own. Make sure the teen understands the ins and outs, and knows the card is for emergencies only!

Analyze Spending and Track with Financial Software. With a program like Microsoft Money, your teen can track where his or her money goes. When he or she sees it in front of them (they’ve spent $50 on fast food this week and can’t believe it!) they will be able to make changes.

What are some ways you plan on teaching your children financial responsibility?