Teach Budgeting to Kids
It doesn’t take long after your first baby is born to realize one important truth about parenting. Kids are expensive! They get more and more expensive the older they get. I have an eleven year old and a fourteen year old and their financial needs seem to be greater than mine and my husbands. We have had to take drastic measures to help them understand the value of a dollar.
Most parents give their children a monthly or weekly allowance for doing chores and helping out around the house. This is an excellent idea, but I think you should take it a step further. The sooner children learn to stick to a budget, the better off they will be when they are grown up. Start when they are young and teach them how to manage their own money. Children have many monthly expenses such as presents for their friend’s birthday parties, clothes, toys, snacks, movies, books, etc. Many parents keep forking over cash without realizing how fast it adds up.
I recommend giving each of your children a set amount of money each month that will cover their expenses and leave them with spending money. They may not be mature enough to handle this until they are nine or ten years old. Let’s suppose that you give each child $25 per month for his or her allowance. Raise this amount to $75 or $100 a month and explain to them that it will cover all of their monthly expenses. I can hear you screaming already, but just hear me out. It may sound like a lot of money, but it will be less money in the long run. Before you settle on the monthly amount, take a look at your checkbook from the previous few months. Add up all of the miscellaneous expenses for each child. Find the average monthly amount that each child spends. You and your spouse can decide if you think that amount is reasonable or if you need to cut back.
Once you decide on a monthly budget, sit your children down and explain that this is all the money they will receive for the entire month for clothing, entertainment, toys, snacks, birthday presents for friends, or whatever you decide. This system is working especially well for my daughter who goes through money like it was growing in our garden. The first month she ran out of money after two or three weeks. We had to be firm and not cave in to her requests for more money.
Of course, the amount that you choose will not cover normal family expenses such as doctor visits, trips to the orthodontist, or similar expenses. It is a budgeting tool designed to teach them about discretionary income. Over the course of a few months your children will understand the value of money better. They will become experts at stretching their dollars. Instead of choosing to go to the movie theater, they may decide to rent a movie or trade movies with friends. They will think twice about blowing ten dollars on some silly trinket they see at the mall. These are exactly the type of results you are looking for.
After trying this experiment for a couple of months, you can look back at your expenses and see if this method has cut your costs. Add up a month of expenditures for your child before this system and then compare it to how much you are now giving them. I guarantee it will be lower.
Once your children become expert money managers, you can suggest that they save some of their monthly allowance or give some to charity. Your children will thank you when they are grown ups and they know how to manage their own money wisely.
Most parents give their children a monthly or weekly allowance for doing chores and helping out around the house. This is an excellent idea, but I think you should take it a step further. The sooner children learn to stick to a budget, the better off they will be when they are grown up. Start when they are young and teach them how to manage their own money. Children have many monthly expenses such as presents for their friend’s birthday parties, clothes, toys, snacks, movies, books, etc. Many parents keep forking over cash without realizing how fast it adds up.
I recommend giving each of your children a set amount of money each month that will cover their expenses and leave them with spending money. They may not be mature enough to handle this until they are nine or ten years old. Let’s suppose that you give each child $25 per month for his or her allowance. Raise this amount to $75 or $100 a month and explain to them that it will cover all of their monthly expenses. I can hear you screaming already, but just hear me out. It may sound like a lot of money, but it will be less money in the long run. Before you settle on the monthly amount, take a look at your checkbook from the previous few months. Add up all of the miscellaneous expenses for each child. Find the average monthly amount that each child spends. You and your spouse can decide if you think that amount is reasonable or if you need to cut back.
Once you decide on a monthly budget, sit your children down and explain that this is all the money they will receive for the entire month for clothing, entertainment, toys, snacks, birthday presents for friends, or whatever you decide. This system is working especially well for my daughter who goes through money like it was growing in our garden. The first month she ran out of money after two or three weeks. We had to be firm and not cave in to her requests for more money.
Of course, the amount that you choose will not cover normal family expenses such as doctor visits, trips to the orthodontist, or similar expenses. It is a budgeting tool designed to teach them about discretionary income. Over the course of a few months your children will understand the value of money better. They will become experts at stretching their dollars. Instead of choosing to go to the movie theater, they may decide to rent a movie or trade movies with friends. They will think twice about blowing ten dollars on some silly trinket they see at the mall. These are exactly the type of results you are looking for.
After trying this experiment for a couple of months, you can look back at your expenses and see if this method has cut your costs. Add up a month of expenditures for your child before this system and then compare it to how much you are now giving them. I guarantee it will be lower.
Once your children become expert money managers, you can suggest that they save some of their monthly allowance or give some to charity. Your children will thank you when they are grown ups and they know how to manage their own money wisely.
posted by Renee Kirchner at 5:00 PM
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