One of the lessons parents find particularly challenging is educating their kids on ways to be responsible with money. Given the current economic downturn, it is more critical than ever to instill your kids with the value of good spending habits. The best way to teach your children financial responsibility is to lead by example. If you have a routine of accumulating debt on your credit cards, your kids will learn from your behavior. Likewise, if you pay your bills on time and take time to work on your budget, your kids will be more likely to mirror those practices.



In the interest of teaching your children responsible habits, do not shelter them from financial discussions in your household. Let them listen to you and your spouse or partner come up with a game plan to save for a vacation or a new car, for example. Let them participate in ways to help save or cut costs when your family needs to do so. With age appropriate explanations, help them understand how much things cost and where the money to pay for them comes from. Providing children with an allowance gives them a great financial foundation. Give them opportunities to earn their allowance through completion of tasks or chores, rather than just giving them money. By working for an allowance, kids learn the concepts of spending, earning and saving. Many parents help their kids start a bank account, so they can help them learn how to set their own financial goals and save. By beginning to teach your children about money and budgets once they are old enough to count, you lay the foundation for financial responsibility.

Credit cards are one of the biggest challenges parents confront while trying to instill good fiscal behaviors in older children. It is wise to provide your kids with lessons about credit cards before they can obtain a credit card themselves. Kids often start receiving solicitations for credit cards, while they are still in high school. And walk on any college campus and you will see the plethora of advertisements and free give aways for student credit cards. Teach your children about credit cards early, so they can responsibly face the temptations of those offers and will understand how to manage their finances. Some parents introduce the concept of credit cards to their children by starting with a debit card. Through the use of a debit card, your kids will understand the concept that you should only buy what you can afford. Others try to instill responsible spending habits by giving their older children credit cards that must be overseen by the parents. The purchases made on those credit cards must be paid in full each month. Providing your child with hands on lessons about credit cards requires some supervision. But the habits you teach them now will follow them once they become more independent.