It’s a parent’s desire to give their children anything they ask for but it’s the parent’s responsibility to teach the child the value of money. Teaching your children about saving money and making a family budget early saves them the disappointments and heartache of learning about money by trial and error later in life. Here are 9 ways to teach your child how to budget money and help them learn the importance of money management.
The concept of kids saving money is more of a reality than most people realize. Children learn more through demonstration than just telling them what to do.
9 Ways to Teach Your Child How To Budget Money
1. Start a Savings Account
Children get most of their habits from their parents. A frugal family does not have to mean a family that goes without. If the child is not yet a teen, use a clear jar for their savings. This clear visual makes it easier to see their money “growing”. Make a big deal each time they add money to their jar about how great it is that their savings are GROWING!
If they’re teenagers, open up a savings account in their name. Using the money they saved from the tactics you taught them, your child will be able to watch their money grow.
2. Take them Shopping
While this may seem counterproductive, it’s a great learning experience! Take your children with you when you go shopping and give them tips on how to compare products in order to get the most for their money.
3. Experience the Transaction
For most kids hearing mom or dad say that a toy costs “x” amount of dollars doesn’t really mean anything to them. Instead, grab their savings jar, let them count out the money that it costs and let them physically hand the money over at the store. It gives them control of their own money, and this simple process will teach them far more than any words of wisdom you try to impart.
4. Pay Half
Help them to save up for a big item by offering to pay for half if they can save the other half. Earning money from hard work not only teaches them the value of money, but it also teaches them to appreciate what they worked for.
5. Forget the Joneses
By the time your child reaches elementary school, they are going to ask for everything their friend has. This is known as “keeping up with the Joneses, and it’s not just the kids who often feel the need to do so. Unfortunately, you may have the income to give them what they are asking for. Set limits and allow your child to decide on what’s more important.
For example, if your daughter wants a new shirt and to go to the movies, explain to her that you don’t have the money to do both but she can have one or the other. Then allow her to decide which she would rather have. This will teach her the importance of making wise decisions and how it affects you.
6. Checks and Balances
Teach your child how to balance a checkbook early by setting up a fake store around the house. As long as the child can add and subtract, they can balance a checkbook. In the store, they will be able to purchase fun items such as extra snacks, more time watching TV, or trinkets. You can use real money, but using play money is safer with school-age and preteens.
Give them a set amount of money and let them know they are responsible for keeping up with adding and subtracting the right amount. Offer them rewards when they correctly balance their checkbook. This encourages them to keep up the good work. Alter the rules for each age group.
Most banks will give teenagers who are at least 14 a checking account, open up a real account in the child’s name and make sure they know they are responsible for keeping up with the balance. Don’t bail them out every time they overspend on their account. This will teach them to stay within their limits.
7. Forget Allowances
When is the last time you received money for doing absolutely nothing? Never, so why should your children learn this bad habit. Instead, pay them commissions based on the chores they’ve accomplished such as cleaning their room, raking the yard, mowing the grass, or cleaning the house.
It’s imperative that kids learn that money must be earned, rather than blindly handed to them.
8. Contentment is King
Being content with what you already have is the key to true happiness. If you’re not happy in life with what you already have, what makes you think that acquiring more stuff will somehow fill that void. By teaching your kids young to be content with what they have, they’ll experience a lot less disappointment and heartache.
9. Help them figure out ways to make money
Kids have a tendency to have a lot of wants and a lot of free time. Help them find an age-appropriate job, or become entrepreneurs! They can develop video games, start a pet walking service, a babysitting service and more. The easiest way to teach your child about budgeting is to give them some financial responsibility and let them learn how to manage it.
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