As a parent, it’s essential to teach your kids how to budget. There are some easy ways to break down the concept of keeping a budget for kids. Teach them now so they will have a better understanding of financial choices as an adult.
When it comes to the future financial success of our children, it starts with us. Now is the perfect time to start thinking about ways to converse with your children about understanding money. As parents, it is important to take the time to educate our children about financial responsibility. We need to teach them how to budget their money accordingly.
Think about the last time that you had a conversation with your child about money. More than likely it revolved around them asking for an item. You either answered “yes” or “no” based on the cost, citing how it didn’t fit within the budget of the week. While it seemed simple to you in your mind, are you certain that your child truly understands the reasons for why their request for a new toy was denied? They heard you say, “no,” but hearing words like “budget,” “finances,” and “cost,” may not resonate with children. This is where we come into play. It is our job to make certain our kids understand the importance of budgeting. Is it ever too early to start these conversations with your child? If done properly, conversations about money can happen at any age.
Budget for Kids: 5 Ways to Teach Your Child About Finances
Use real-life examples to help them understand
The next time you head to the store, let your little one bring their money along with them. When they ask for a toy or treat, it’s the perfect time to show them whether they have enough money to purchase the item. Have them communicate the price, and then work with them to count out their money. If they have enough, they can choose whether they want to spend their money on the item. If they don’t have enough, then explain to them that their money isn’t enough to cover the cost — they cannot buy the item today. Using real-world examples helps to present it in a way that they can truly understand.
Create a fun lesson on Tax Day to help your child understand finances
Tailor your lesson to what your child will be able to do and understand. Don’t create a lesson that will frustrate them when the point is to help them understand finances better. Young kids can practice adding up money. Teach your older children a lesson detailing the percentages of taxes paid on purchases. No matter the lesson, do it together so you can then talk about it thoroughly once completed.
Allow them to earn money from chores they complete at home
Giving your child an allowance in exchange for chores shows them how to earn and save money. If you don’t want to exchange money for regular chores, you can give your children extra tasks to complete around the house or tell them to ask a neighbor if they need help with things like mowing the lawn, weeding the garden, etc. They could even set up a lemonade stand or start another small business, like selling baked goods at their school! When kids earn money for work, they’ll learn the value of hard work and the importance of saving money. Many young kids actually believe money is just something you can get from the bank whenever you need some more… if only, right? Teach your kids that money is something everyone works hard to EARN.
Talk to them about the truth behind credit cards
Think of how many times you’ve pulled out your credit card and swiped it at the store in front of your child. Probably a ton, right? When you pay with a card, your child sees that when they want something, they can just swipe a card. They don’t know the truth behind the bill that comes to be paid every month. They don’t know that if the bill doesn’t get paid, interest is charged as well! As a parent, it’s important to talk to your child about the cycle of credit cards, as well as the good, the bad, and the ugly that accompanies using them.
Be mindful of the example you are setting
Your children are going to mimic you. If you spend money freely and openly talk about not having a budget, your children will hear you. Even if it doesn’t resonate with them at the moment, they will remember those words as they get older and as they start to budget their own money. Be open to talking to them about how you budget and how the family works together to stay on budget. The more they know, the better that they can understand the importance of how a budget truly helps the family finances stay on track.
No matter the age of your child, you can find ways to start talking to them about the importance of budgeting. Communication is key! Take the time to educate your child, and learn with them as well. The more that you can work together to create an understanding of how money works, the sooner your child will grasp the importance of budgeting appropriately.