How to Teach Your Kids Why Budgeting Matters.

How to Teach Your Kids Why Budgeting Matters. | Out of all the lessons a parent teaches their child, money management is perhaps the most difficult to generate excitement around. Most kids maintain the mindset that cash needs to be spent quickly and carelessly, which is why teaching your children how to budget their earnings is crucial. As you navigate how to show your children the importance of maintaining a budget, consider the helpful information below as your guide. 

So How to Teach Your Kids Why Budgeting Matters ?

1. Teach Saving

The best place to start when it comes to teaching your kids why budgeting matters, is with saving. Whether you encourage your little ones to hold on to their tooth fairy money, or you open up a savings account with your working teen, teaching saving at every age is a must. A great place to start with your kids is with the 1-1-1 method. This savings method encourages your children to save, spend, and give all at once. The next time your child is given $30 for their birthday, advise them to put the 1-1-1 method into practice. This would mean they would put $10 into savings, $10 aside to be spent on an item of their choice, and $10 to be donated or given to a charity of their choice. This process will be a win for your child’s savings, and for their understanding of how important it is to budget. Practice saving fake money with your younger kids and rewarding them with small items such as candy or more screen time. There are several user-friendly apps like Piggybot for example, that can help you better show your kids how to manage their money. 

2. Teach Spending

The main purpose of budgeting is to keep track of spending, so teaching your child smart spending techniques is a great way to give them a taste of all that goes into keeping a budget. A perfect way to teach spending to your kids is by helping them set goals for themselves, and allowing them to shop with you. The next time your child tallies up their birthday earnings, or even their graduation card cash, urge them to set a goal to save the money for at least a month. Explain that as the month progresses, there may be items that come up that they need more than what they want instantly. After their month is up, help them map out the best way to spend what they’ve saved, always leaving a certain percentage of what they have left over.

Teach them how to compare pricing and the best places to look for sales, especially during back to school time. A great place to encourage your kids to shop is your local thrift store. Thrifting helps them get everything from silverware for college, to the perfect pair of jeans, at a more affordable price. Utilize online thrift stores like thredUP as well to get popular name brands like Madewell for a price that even your teens can afford. Teach them to save on their groceries by encouraging them to shop at affordable produce retailers like Aldi instead of the most popular local option. Smart spending will help your kids better understand why a budget for their funds is the best plan of action for their future needs and wants. 

3. Create A Budget

To better help your children understand budgeting, it’s best to actually go through the process of creating a budget with them. Whether you create a computer spreadsheet with your older children, or you use a simple dry erase board for your younger kids, it’s important to help them visually keep track of their funds. While your younger children most likely have no monthly expenses, it’s more important for them to keep a budget of how much money they have, and how much it costs to purchase the items they want. For your teenagers, help them take into account what they regularly need to spend money on as they might not be aware of how much small items add up. Have them designate money each month to gas expenses, coffee, and eating out. Be sure their needs are more accounted for than their wants, and encourage them to keep a close eye on just how much money they spend at places like Starbucks. They might be surprised at how much money their coffee addiction is costing them when they tally up their spending at the end of the month. 

4. Reward Their Hard work

Whenever your child follows through with a monetary goal, or works hard to make saving a habit, be sure to reward their hard work. Having a budget at a young age might not be the most popular concept, but it is certainly something you should praise. If your teen works hard to save up for a new laptop, reward them by paying for the computer’s accessories. When your elementary student finally has enough in their piggy bank to get that toy they’ve had their eye on, make a day of your outing by taking them out for lunch as well. Teach your children that good things come to those who are patient, and who work hard. Placing a value on budgeting throughout every age of your child’s life will help them to value their money more than others, and will set them up for future success.