3 Tips to helping your child become financially responsible.

July 20, 2022

With inflation taking over the state and the rest of the country. It is crucial now more than ever before to know where your money is going and how it is being spent. Your child may be at an age where they are getting their first summer job or they're saving for College. Regardless, we compiled a list of some useful tips to help your child develop a healthy relationship with money. 

I. Open a Savings Account 

I'm sure most of you granted your child a checking account by the time they were teenagers. However, developing a savings account is also just as essential. Having them learn the value of savings at an early age is essential and will become a valuable skill once they reach adulthood. 

The ideal amount is to have three to six months savings to cover living expenses. According to the Motley Fool, nearly 45% of Americans have $0 in their savings, and 33% are living cheque to cheque. This study was done in 2019 and will only increase in the upcoming years (due to a number of factors). Financial Literacy is something not enforced in the public school systems. Teaching your child this skill will put them ahead of their peers and postively impact their life.

II. Establish a Budget System

The average worker gets paid biweekly, which equates to twice a month and twenty-four times a year. Knowing the difference between essentials that are required for survival versus our own personal wants are crucial. I'm sure like most, your child and maybe yourself reading this likes nice things. There's nothing wrong with that. However, impulsive spending is very toxic and will affect your other bills, if not managed.

Creating a budget plan is simple and free. I encourage you to make an excel spreadsheet with your child and map out all of their expenses. If they do not have any, have them contribute to the groceries in the house. Maybe a light bill or water bill. 

This will not only prepare them for adulthood, but it will also teach them responsibility. I use this app called "True Bill". I enter in all of my bills and the dates they are due, and True Bill reminds me days in advance that I have upcoming bills. In addition, it gives me weekly reports on my spending habits and if my account drops below a certain threshold. It also gives monthly reports on if my spending has fluxtuated and suggests ways I can reduce it. This is a simple way for me to keep track of my expenses and stay up to date.

III. Credit is King

Having good credit is essential, especially in life. Having bad credit can prevent someone from purchasing a car or home, or even taking out a business loan. 

By: Malique Joseph