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How to Teach Your Kids to Budget

How to Teach Your Kids to BudgetAs a parent, you have a lot on your plate. You need to teach your kids so many things on a day to day basis, along with handling your own work responsibilities.

It can be overwhelming at times, so it is tempting to cut corners and keep things as easy as possible. However, if you are willing to go the extra mile and teach your kids how to budget, you will be doing them a huge favor as they move toward adulthood.

Believe it or not, you can start quite young with the idea of a budget. Even though these early budgets will be quite simple, they will lay the groundwork for what is to come later in life. Let’s take a look at how this might work.

It Starts with Chores

One of the most important lessons that comes from budgeting is the understanding that nothing comes free in life. Even though you would gladly give what you have to your child, it doesn’t do them any good to get everything for nothing.

This is where chores come into the picture. You can think of household chores as your child’s first job, even if it is an informal one.

When your child reaches an appropriate age, have them help with a chore that is safe and reasonable for their age and size. If you choose to do so, you can attach a reward to the chore as a form of payment.

For small children, this probably won’t be money, but rather something like a tasty treat or a new toy after they have completed the chore a certain number of times. As your children get older, you can start to think about making the reward financial. Then, you can work on a budget.

A Child’s Budget

Your kids don’t have their own bills, but you can still sit down with them and establish a budget for the money they earn from chores.

For example, let’s imagine that you are giving your child $20 per month for the completion of a few chores (the amount is up to you, of course). Talk with your child about what that amount of money can buy, and speak with them about the importance of saving along the way.

So, maybe you will suggest that they save at least $10 per month, while using the other half to buy a couple small things. When you are at the store, you can point out prices and explain how money works.

As time goes by, your child’s budget will naturally get more and more complex. At some point, they will be able to drive and will need to pay for the costs that come along with a car. Also, they will head out into the real world and get a job of some kind, allowing them to have their own source of income.

By laying the groundwork early with a simple budget, the realities of the adult world will be much easier for your child to handle. Good luck!

 

How have you taught your kids to budget? Did your kids do chores?

 

Photo courtesy of: David Kessler

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John Schmoll is a Dad, husband and veteran of the financial services industry. He's passionate about helping people learn from his mistakes so that they can live lives free from the shackles of debt and empowered to make their money work for them. You can check out his other sites: Frugal Rules, for ways to improve your financial literacy; and Sprout Wealth for tips on different ways to make more money. John has been featured on Forbes, Lifehacker, Yahoo Finance and US News & World Report and more. If you're wanting to grow your blog, check out my blog coaching services to see how I can help you take your site to the next level.

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