Teaching Our Children the Values of Budgeting
By Jane Sandwood, Freelance Writer
We can all develop bad habits one way or another, but teaching our children financial literacy early on can help them prepare for when they haven’t got us to rely on when they’re older. In the same way, as we develop effective study habits over time, we also need to learn help children understand how to make their finances go further. One of the important habits to teach them is by helping them learn how to save money and budget so they’re ready to take those skills into their adult world.
Starting steps with an allowance
By providing your child a regular allowance, you are giving them the opportunity to learn how to budget from using their own money. Although parents will have different rules as to how they give their kids pocket money, and for what reasons, the essential principles are the same: the child knows how much they receive and when they receive it. Similarly, if your child has a part-time job, you’ll want to teach them how to differentiate the importance of spending and saving so they make the most out of their earnings. From this, grows the possibilities for them to learn how to manage their money and whether they choose to spend it on smaller things or save it for the bigger things they want.
Include your child in the family budgeting
If you want to teach your child the basics of budgeting, then think about including them in your family’s management of money. That’s not to say that they have to be involved in all the household’s expenses, but letting them have an opinion in some financial decisions can not only teach them the values of controlling expenses but it can also give them a degree of self-worth through the trust you’re showing in them. This can vary according to the age of your child but can encompass discussions on anything from family outings to best methods of keeping phone or energy bills down.
Encouraging young people to be smart with money
There are many different ways to save money, from using the money box when they’re smaller through to using a consolidation company when they go away to college. Explaining these various ways helps to give them informed decisions on how they should go about saving their money. When they’re ready to learn about investing their money in a high-interest account, for example, you’re helping to gain valuable knowledge about banking. In the same way, teaching them the differences between credit and debit cards and the effects they can have on their personal finances will show them how money can work against them if they end up borrowing when they’re older.
Explaining to our kids the importance of keeping track of how and what they spend, teaches them to be a smarter consumer. By encouraging them to ask themselves questions before parting with their cash will also prevent them from having financial headaches in the future.