Teaching your kids to budget
The tooth fairy, chores, grandma and grandpa, friends, family and a lot of other people will give your child money from the day they are born. We use piggy banks and envelopes and even have a savings account for each of our kids. This helps them understand the importance of why they don’t get to run to the store and just spend it.
Teaching your kids to budget can be a tough and long process – but it will be well worth the time spent as they get older. Kids don’t often understand that parents have limited funds and that they can’t spend endless amounts of money on candy and cookies and ice cream. Although it would be nice to spoil them, its great for them to learn WHY there are limits at the store. Kids who grow up with an understanding of budgeting and finances are far more likely to succeed when they get a job of their own and have money coming in. (a PASS card from American Express is a great way for them to manage this) Here are a few ideas to help you talk to your kids about budgeting and get them involved with managing money wisely.
- Have a monthly or weekly meeting with your whole family and talk about your finances – be open with them so they know exactly why you aren’t going out to eat next week or to Disneyland later that summer. When they understand how much money you have coming in and where it’s all going, they are going to be more understanding and supportive.
- Give them an allowance and show them how to make smart financial and consumer decisions. Teach them to put 20% into savings, to give to charity, and if they want something, to save up for it and find the best deal.