As parents we are responsible for teaching our children many important life skills and equipping them with the ability to make smart decisions. Teach young children about budgeting and how to manage their finances is one of the more important life skills we must pass on. Many parents wonder when they should begin to teach their children about money, and the truth is, as soon as they can count. Good spending and saving habits begin at a young age and last a lifetime.
How To Teach Young Children Financial Responsibility
Be Their Role Model – Children see and hear me than you may think, and often follow their parent’s example. The first step to teaching your children the value of money and the importance of budgeting is to show them how you create your budget, pay the bills and save money. You can easily extend these lessons by taking your children with you to the bank, and give them a simple lesson on how the bank works (put money in to take money out). Next you may want to teach them how and why you are depositing money into a savings account. Finally, you can explain how saving that money will benefit you and your family down the road.
Have Your Children Participate – Grocery shopping is often the first exposure to using money a child has. Starting as early as 4 or 5 you can ask your children to help you at the store. Help them count out the dollar bills and change needed to make your purchases. Elementary school age children can be given the task of looking at the price tags of various products and comparing between the brands. They can practice their number recognition while choosing which one has the lowest price. You can also ask for their help before heading out to the store by giving them the task of looking in the Sunday paper for coupons to clip that the family can use on an upcoming trip to the store. Finally children as young as the third grade can help you create a family budget for the grocery store by looking up prices in your price book and writing them next to each item on your grocery list before tallying them up creating the budget for your grocery shopping trip.
Let Them Earn A Paycheck – Allowing your children to earn their own money through chores they can do around the house is a great way for them to understand how earning money works in the real world. Once a week give them their paycheck. Make sure to pay them with both bills and coins that way they can learn to split the money in a way that will last them the week. You can help your young child learn to budget by giving them guidance on how much to save for any upcoming even they want to participate in. If they have not budgeted wisely they may come asking for more. When this happens (and it will) you have a choice to make. Tell them no so that they learn to budget their money better the next time or loan them the difference with the expectation that they will pay you back out of their next paycheck before they can spend any of their earned income.
Encourage Them To Save – If your kids, like mine, are still young giving them a piggy bank as a safe place to save their money is a great idea. They will be excited to have their very own bank and it will encourage them to start saving. As your children get a little older, around seven, you can help them open their own savings account. Help them build up their savings with a goal to purchase a larger item, or to help pay for camp or another trip. Keeping track of their money in a savings account ledger will not only encourage them to keep going but help them practice their basic math skills.
These four simple steps are the easiest ways to teach young children about budgeting. By incorporating them into your every day lives and leading by example your children can grow into financially savvy young adults. Who will hopefully avoid many of the pitfalls we often stumble on.
This is the first in a two part series on teaching children how to budget. These early lessons are an important part of building a solid financial foundation that can help our children build wealth instead of working to dig themselves out of debt.
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