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Teaching Kids About Budgeting

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Teaching kids about budgeting is one of parenting’s biggest challenges. Unfortunately, it’s not something that parents always take the time to do. For adults, banking, bill paying and saving are second nature. Through years of trial and error, parents have learned how to create a budget and stick to it. Nonetheless, most people still struggle with financial concepts, which they feel puts them on shaky ground when it comes to teaching kids about budgeting. 

No matter how difficult it may be, it’s important to get kids involved in the idea of budgeting from an early age. Hopefully, this will create an adult who is disciplined about money and less likely to fall into the traps of overspending and over borrowing.

Let Kids In on the Household Budget

If discussing the monthly family budget isn’t on the agenda, then it probably should be. While it likely isn’t necessary to let kids know about the nitty gritty details of the budget, it is important to let them know about the principles upon which it operates. Introduce them to the idea that parents work in order to receive paychecks and that when paychecks are received, it’s important for the worker to pay themselves first. 

That means setting aside some money for investments and for rainy day savings. After that, the bills, like the mortgage and car insurance, take precedence. Once all of the bills are paid, the amount left over is used for discretionary spending like family entertainment.

Budgeting for Discretionary Income

Deciding where to spend discretionary dollars is tricky. Each member of the family has their own interests to pursue, and it’s also necessary to set aside money that’s for the whole family to enjoy together. Lots of family activities don’t have to cost much, or even any, money. Nature hikes, going to the park and spending an evening stargazing are all virtually free pastimes. Still, it can be nice for families to do something a little more elaborate. One favorite family outing is the movies. Help kids to understand how to save money on movies by using coupons.

Create a Want List

To instill the idea of saving toward a goal, have each child create a want list. While watching television or shopping at the mall, kids see countless items they’d love to have. Ask the children to write down everything they want while refraining from immediately purchasing it for them. Go over the list periodically together, reviewing each item and asking questions about why they wanted the item. Some items they won’t remember or will have changed their mind about. Other items are sure to stick in their minds, and these should be ranked in order of importance. 

Encourage children to save toward the number one item on their list and help them set aside a portion of their allowance to meet this goal. Most children feel a wonderful sense of accomplishment when they are finally able to purchase an item they’ve dreamed of owning for quite some time. 

1 comments:

Tina Jin said...

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