Budgeting is a fairly straightforward concept but can take years of practice. Why not start teaching your kids budgeting basics now to help them in the future? Here are 7 budgeting basics you should teach your kids.
Savings is an important concept for kids to learn. You can make teaching kids how to save fun. Ask them what is an item they really want. Maybe it's a toy, book, or even something higher-priced like a phone. Help them put together a savings plan. Find out what the price of the item is, then based on what their allowance is, see how long it would take them to save up for that item. A lesson in savings will really resonate with them. Have them put their savings into a jar, so they can watch it grow!
Perhaps your child gets a regular allowance for doing chores around the house, but don't let it stop there. Encourage your child to figure out other ways of making money. Lemonade stands, selling items in a garage sale, walking the neighbor's dogs are all great ways your child can earn more money. Don't put down their ideas of entrepreneurship. Encourage them to think outside the box on new ways of making money.
Raise a Savvy Spender
Teach your child to be savvy with their money. Go on a shopping trip and bring along coupons. Give them tips for how to spot a sale. Teaching a child about sales and couponing at a young age can set them up for success later in their lives.
Generosity is a wonderful lesson to teach children. While it's fun to buy things for yourself teach them to be generous and give money to charity, people who are less fortunate, or tithing at church. There is a positive feeling that comes from giving back.
Avoid Impulse Buys
A valuable lesson to teach young children is to resist temptation on impulse buys. This gets a lot of adults into trouble today. If your child really wants an item instead of buying it for them immediately, let them think about it. Set a rule that before they can purchase something, they have to think about it for at least 24 hours. Many times, they may decide that they don't really want it after all.
Open a Savings Account
Take your child to the bank and help them open a savings account. Introducing them to the process of how a bank works early is a great lesson to teach. Let them bring the money they'd like to deposit into the bank themselves and watch their excitement as they see their bank account grow!
Teach the Dangers of Credit Cards
When you teach your child that credit cards can be dangerous, you will save them a lot of trouble in the future. Show them that credit cards aren't "free money" and that you have to pay it back immediately or interest will be built up on it.
Teaching kids when they are young about budgeting basics will make them savvy spenders and savers in the future.