Children learn a lot of things in high school and college. Unfortunately, financial responsibility is usually not one of them. They often go into the real world with no idea of fiscal responsibility. It’s up to you to instill healthy money habits instead of having to learn the lessons the hard way.

Plant the seeds of financial responsibility early

Like everything else with parenting, teaching financial responsibility is a continuous process. It’s best to get the financial ball rolling early, real early.

1. Get a piggy bank

Giving young kids a piggy bank and watching them fill it should be their first financial lesson. The excitement they get from emptying the contents is the goal—a fun lesson in finance. Any spare change in our house ends in our kid’s piggy banks. It quickly adds up, and it gets heavy, too!

2. Open a Savings Account (to put all that change from the piggy bank)

A financial responsibility is a no-brainer. A savings account can be a tool to teach not only savings but also patience and an introduction to the wonderful world of compounding. The kids must be involved in putting money in the bank. Sure, deposits are now usually done with an app, and while that may not have the oomph compared to physically going to the bank, it works. The important part is to track growth.

In our household, when our boys receive a gift of money, they are allowed to keep half for themselves, and the other half must be put into their savings account. They’ve seen the growth over the years and what saving has accomplished.

It’s also worth mentioning that we’ve kept a tight leash on what the boys can do with the cash they’ve saved for themselves. Not spending frivolously is just as important as saving, maybe more so.

3. Open a 529 Plan

Ok, this may be more for the parents, but it’ll be a big deal once the kids get ready to go to college or trade school. You need to start the cost of continuing education discussion early. A college education is a team effort.

Let them know how much you’re saving for their education, how much they will be responsible for, i.e., with loans, and make it a written plan. Update it every year. Hopefully, it will provide a little incentive to work hard, but I won’t guarantee that.

4. An Allowance

I have a confession. An allowance in our household was a failure. Our boys didn’t give a rats #$%# if they received an allowance. They were happier not doing the work and not getting the money.

Or, get this, when I needed additional help outside of the usual chores, they wanted to know how much money was in it for them. OK, they’re learning to negotiate, but I’m not going through this every time I want them to do something.

Instead, we abolished allowance, said you live here, we feed you, take you to all your sporting, school, and friend events, save for your education, and do a thousand other things parents all over the world do for their children. You will do some chores around the house to learn responsibility and that nothing is free. So go clean your room.

Sure, as all kids do, it was still a fight! Just because an allowance didn’t work for us doesn’t mean it may not work for you.

5. Learn to invest

Get your kids interested in investing by buying individual stocks through a dividend reinvestment plan (DRIP). Start with companies they know. My kids were very excited to think of themselves as “owners” of a company.

The first job

When your child gets that first job, it’s time to ramp things up. I remember the different jobs I had through high school and college. I had a few exciting jobs.

Hospital: Since I was still in high school, I was only allowed to perform minor surgeries….ok, just seeing if you’re paying attention. I worked in the kitchen serving the oh-so-famous hospital food.

Halloween costume manufacturer: Spent a summer making, packing, and delivering Halloween costumes for the Walmarts, Targets, and pop-up Halloween costume stores of the world.

Electrician/air conditioning repair: This was the hardest job I ever had, and my boss was a tough SOB to boot, but I learned things that help me to this day. The most challenging week I ever worked in my life was when we installed central air in a 200-year-old home. I won’t even go into getting shocked or going into attics to repair A/C’s in July when it was 95.

That’s enough reminiscing. What should you do when your child gets their first job?

6. Open a Checking Account

Even with technology and instant access to our account balances, teaching them how to balance a checkbook is essential. I little do as I say, not as I do advice. Even though there are fewer and fewer checks written every year, don’t forget to teach them how to write one.

7. Learn to Budget for Expenses

Have your children have some skin in the game. Do they have a cell phone, or do they drive? Make them pay for that privilege. People vary widely on how much they feel their children should pay.

Some parents want their kids to pay for everything, while others prefer to pay for everything themselves. Everyone is different. Find your comfort level and go with it. How much is up to you, but make sure it’s enough to make them think about their spending habits.

8. Learn to plan for emergencies

An emergency fund? Yes, I know an emergency for a teenager or young adult is not having enough pizza or gas. But their first real financial money crisis may be car maintenance or losing their cell phone. Keeping a specific amount in your savings account for the unexpected is a good habit of starting early.

9. Begin Saving for retirement

Having a teenager save for retirement in a Traditional or Roth IRA is one of my all-time favorite strategies. To be able to contribute, they must have earned income, which means income that is reported on their tax return.

They can begin saving up to their gross income amount or IRA contribution limit, whichever is smaller. Another bonus these IRA’s aren’t reported on the FASFA form to determine financial aid.

Think about it. A 16-year-old has 50 years until retirement. 50 loooong years of letting that money grow.

An IRA Match

What teenager wants or even can save for retirement? Not many. Typically, I see the parents helping out here. They usually create a match, such as for every $25 their child contributes to an IRA, the parents will match it by 10%, 25%, etc.

There are plenty of opportunities to teach financial responsibility to children, whether they’re two or twenty-two. Most take an investment of your time. An investment that could pay off in the future with a responsible, financially independent adult.

I’d love to hear how you instill good financial habits in your children or what your favorite job was growing up. Feel free to leave a comment below!