Teaching Kids to Budget
First you teach them to walk and then you teach them how to talk. Eventually, they grow up, get jobs and start adult lives of their own. But there is one import step you can guide them through from primary school to adulthood that will truly set your kids up for life - budgeting. Knowing how to budget and save money is one of the most valuable skills that you can impart on your kin, if only so they eventually graduate from your payroll and pay for your dinner every once in a while.
The good news is that it is never too early or too late to teach your offspring about money and the importance of handling it correctly. Whether they’re twelve or twenty-two, they are able to learn that it doesn’t grow on trees and that having a savings account is cool. Of course, kids aren’t always completely open to their parents’ advice because, even as the home owner who puts food on the table, what do you know? So, the best thing you can do is make learning about budgeting a fun process that will give them a positive attitude when it comes to sticking to it.
Start off Slow
Rather than just handing out $20 bills whenever they want to see a movie or allowing them to download whatever App they want on your credit card, it’s best to teach them to earn it. The satisfaction of getting paid for doing a job is addictive and encourages self-esteem. It makes kids, teens and adults value their own time and understand that developing skills will lead to opportunities. It’s time to stop making them unpack the dishwasher for free, and “employ” them to do it. Eventually, you may find that the dishes were done before you even asked.
Watch and Learn
Once they have some money in their pocket from doing jobs around the house, and are feeling really good about themselves because of it, it’s time to let them experience the ups and downs of being a money earner. Instead of telling them want to do with their pocket money - or wages - let them experience throwing it all away in the blink of an eye. You simply can’t describe to someone what it feels like to work for ten hours and then spend it all in ten minutes. Your child will need to experience it for themselves. Once they find themselves penniless and confused, they’re primed for some lessons.
Let Them Lead the Way
Once they have realised that it’s better to have money than not, let them express what they have learned simply from the experience. There is a lot of value in finding out what their financial instincts are and having them discover what they want on their own.
Introduce the Budget
Fifteen is obviously far too young to start saving for a house. So, for budgeting to make sense, it needs to be working towards an attainable and desirable goal. Maybe it’s a new toy, new outfit or a new car, whatever it is, it gives you an opportunity to explain that setting aside a portion of their earnings will achieve the goal.
Budgeting doesn’t have to mean abstaining from everything else that costs money. It is entirely possible to save and spend at the same time, it just needs the correct ratio. Teaching children that they can have the best of both worlds - so long as they clearly know what they want - will help them have a healthy relationship towards budgeting for when the time does come to buy a house.
If All Else Fails... Introduce a reward system. The fact is, if budgeting was easy we would all excel at it. Instead, it is a genuine challenge as we are seduced by so many different products and adventures that we don’t want to miss out on. Giving rewards along the way will aid in creating a sense of satisfaction until the budget genuinely does pay off. Sure, it isn’t exactly how life works, but just think of yourself as a very generous bank with attractive interest rates.