It’s never too early to start teaching the kids the value of money. Unfortunately, it’s what makes the world go round and in an age where debt is increasingly a stressor and money-maker in itself, educating the next generation about money management is important. We’ve found a few easy and fun ways to introduce the concept of budgeting to encourage good habits that will last a lifetime.
It doesn’t get much more basic than a piggybank. But this simple concept that promotes is the foundation for every financial decision later on. Try using a clear container so that progress is easily viewed. Another idea is to have three piggybanks or jars on the go. One is like a checking account: this is the money they can spend now. The second is for savings, and the third for sharing with others. They can pick a charity or use it for a friend’s birthday present.
Prioritize! Let your children weigh in on budgeting decisions. We’re not talking game changers, but start small with something they can connect to, like back-to-school shopping. By prioritizing their wish list, like really awesome new runners means they can’t afford basic runners and a new back-pack, they’ll start to understand the value of their purchases. You could even make a deal to pay for the basic version of their purchase desire, and they have to save to spend the difference and get the one they really wanted.
Assigning dollar amounts to chores instead of a blanket allowance amount will start to infuse children’s work-compensation relationship with meaning. With smaller kids especially, using real cash to make a toy purchase will show them the exchange of goods; a tangible lesson that’s far more effective than a long lecture. You could even take it a step further and show the value of their luxurious lifestyle by determining how much their clothes, toiletries, and even their portion of cell phone, internet and cable bill usage is. Factor it into their allowance, but they’ll have to pay it back to you.
FamZoo is a great online app where you can set up accounts for your family to track earnings, expenditures and savings. Printable budget sheets are available on the Frugal Fanatic. You can also make your own with a simple spreadsheet and customize them to your needs.
When it comes down to it, setting a good example is always the best teaching tool. Being open about the dangers of debt and credit cards cycles, doing a family budget together so they can see how much money goes towards basic survival needs like housing and food vs. disposable income, and instilling good saving and sharing habits early will help put your kids on the right path to future financial success. Which could even mean the purchase of their very own dream home, one day.
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