Growing up in a single-parent household taught me a lot about money. My mom was always very transparent about money and while she didn’t share her financial struggles, I did grow up understanding the value of a dollar. I don’t think any parent should burden their child with financial stress however raising financially responsible kids is important.

After my divorce and my own struggles with money, I wanted to make sure Reese had a headstart when it came to understanding how money works and money management. Here are a few things I’ve taught her along the way and why I feel they are important.

Simple Tips For Raising Financially Responsible Kids

1. Money can be exchanged for goods or services.
This is one of the first lessons you can and should teach your child about money. Kids around the age of 3 years old are old enough to understand the concept of money so that a great age to start. On your next trip to the grocery store buy one or two items and let your child hand the money to the cashier. By doing this, they will gain a greater understanding of the concept of being able to exchange money for things you want or need.

2. Be careful with money.
Some people think small coins under 25 cents are just too small to care about so when cleaning out loose change from their pockets, purses, or cars they simply throw these smaller coins in a bin out of sight. What a waste! Encourage your child to be careful with all denominations of money, and show them how those small coins can add up. By starting a family small coins collection box kids can watch simple coins turn into trips for ice cream or Roblox credits box.

3. Money has to be earned.
Buying your kids’ Starbucks and Roblox credits on-demand without expecting anything from them in returns leads to kids not understanding that money has to be earned. When you tie money to things like chores, they begin to understand the value of hard work and how to relates to earning money. Some parents are anti allowances and feel kids shouldn’t be paid to perform tasks expected of them. I used to believe in this but I quickly discovered I could get more from Reese if I offered something for her to work towards.

4. Encourage one-third savings, one-third donations, one-third spending.
The exact proportions in which your child divides their money are up to each individual family to decide, based on their beliefs and the needs of the child. This can quite easily be achieved by providing them with Greenlight Debit Card, 3 piggy banks or money boxes, one for spending, one for saving and one for donating.

5. Avoid borrowing money wherever possible.
It is always much harder to repay money that has been borrowed than to save your money. Some loans, such as home loans, tend to be unavoidable though. A good rule of thumb is if you don’t have the cash to buy it, you can’t afford it!

6. Live within your means
Older kids can benefit from learning how to live within their means. If your child gets an allowance to make sure they learn how to budget that allowance to last them until next payday. This might mean telling your child no when they want to buy something and don’t have the money. I struggled with this a lot in the beginning, Reese and I would go to Starbucks and I would order a drink for me but not one for her. Starbucks is a treat and something she should budget for but if I constantly spotting her she would never understand the importance of budgeting. Did I feel like an evil mommy drinking Starbucks in front of her? Yes, but it only took 1 or 2 times for her to start tucking away Starbucks on her greenlight debit card. As kids get older this can help them understand living within their means. You don’t usually need a fancy car (and car payment) or $200 shoes (and credit card debt). All these things are nice, but only if you can easily afford them!

7. Show them how to budget & live within their means
This is one of the most important skills that your child should know, that so many people often forget to do. This should start early and not when they are 18 and ready to move out of your house. Recent surveys have shown, that many people are spending 10% to 20% above what they earn. They are earning enough money to fund their lifestyle, but they simply aren’t budgeting it, and are wasting large amounts of money each week.

If raising financially responsible kids is important to you (and it should be) then these seven tips should get you and them off to a great start.