Time for a "teachable moment." Financial responsibility. While Washington debates and the news media throws out "fiscal cliff" every chance it can, now is a perfect time to talk to your children about financial responsibility.
First, set a good example. As parents, we are our children's first teachers. Children watch everything we do, and that includes how we manage our finances. Parents want their children to save for the future and to not waste money on junk they won't play with or use. So naturally, parents should do the same. Start saving for retirement, even if it's only a small amount each month. Don't buy things you don't need or won't use. I'm sure you can think of plenty of things in your closets or garages that you really knew you wouldn't use when you bought them.
Second, teach your child to start saving, regardless of his/her age. Have your child put away part of his/her allowance each week to save for a new toy or have your teenager start a college fund. You can help younger children understand the benefits of long-term saving by breaking down how much the child will need to save each week to buy a new toy. Older children can benefit from a discussion about interest and how saving over the long term can help them in that way as well.
A piggy bank is fun for young children, but by the time your child is 8, it's probably a good idea to start a small savings account. Have your child help fill out deposit slips and balance statements, both are great practice for your child to begin learning about finances.
In my next post, I'll share more strategies for parents to help their children learn financial responsibility.