Why You Should Teach Your Children About Budgeting At An Early Age

Why You Should Teach Your Children About Budgeting At An Early Age

Kids budgeting: The practice of budgeting dates back to biblical times and has been used to control all aspects of daily life, from money and food shortages to wars and conflicts. In recent years, however, the practice of budgeting has taken on new meanings as our economy has faltered and many have lost jobs or suffered pay decreases. In addition, budgeting is becoming increasingly important due to the ever-changing global economy. As school districts across the nation prepare their students for this upcoming school year, many are finding that introducing or expanding the teaching of budgeting into their school curriculum is essential in order to prepare students for the real world.

 1. Benefits Of Teaching Kids Budgeting And Good Money Habits  

A budget is simply a detailed financial plan for a specific period, usually one year, often planned months in advance. It can also include detailed financial forecasts, planned revenues and expenditures, total resource amounts, costs and expenses and long-term financial goals. Most budgets are broken down into categories such as income, spending, investing, savings and investment. Budgets are used to control spending, plan for future income and expenses and set goals. Some people believe that budgets provide a realistic view of money and help individuals learn how to manage their money. However, others think of budgets as a way to teach children about money habits.

One reason teaching children about budgeting early in life is important is because it allows them to develop good money management skills. When young, most children are more prone to fritter money away, squander it on junk foods or other “needs” and fail to take any effort to put the money into extra savings or available accounts. Instead, parents and teachers focus on teaching children how to cut expenses and choose the most beneficial options when shopping. With a tight household budget, there is little room to go out and buy things that aren’t essential.

In order to teach children how to control their money, it is helpful to start with a simple budget. Create a monthly budget based on your family’s income and spending. Decide where your money goes first and use it to pay bills and invest for your future. Make a list of all of your income and expenses and identify areas that need improvement. Once you have listed your income and expenses, review the budget to identify areas where you can make changes and cut back.

Budgeting teaches children about cash flow and financial responsibility. Cash is essential in life and everyone needs it to survive, so it makes sense to budget your money carefully. You will have no problem getting your bills paid on time, if you properly plan your budgeting practices.

 2. How To Teach Your Child About Budgeting  

If you want to help your child grow up with good financial habits, teach them about budgeting as early as possible. There are many resources available for kids who are learning about budgeting from school, home, or the media. These educational resources are beneficial for teaching children money management skills as well as helping them develop good financial habits. For instance, if you want to teach your child how much money goes toward personal spending habits, then set a regular budget and stick to it. For example, you can tell them that they can spend $100 every week towards their new wardrobe.

As they get older, encourage them to set up some budgeting systems. There are many books out there that explain different budgets and spending habits. For kids, you may want to include some fun activities to help them get started with budgeting.

 3. How To Teach Your Child About Saving Money 

The first step to teaching children about saving habits is to teach them about thriftiness. Make it easy for your kids to understand why they should not be spending all of their allowance or other earnings on things that aren’t necessary.  For instance showing them how much your monthly Columbia Gas bill is can help to show them the cause and effect of how energy usage impacts your utility bill Kids budgeting

Teaching children to become smart consumers is another great way to teach them to save money.  Most kids have no idea that the same products and services are often available at significantly different prices. .  

A savings account also teaches children the value of money and the importance of saving for the future.

The next step to teaching children about saving money is to have a conversation about what they are spending it on. Find out what you all are buying and how much you are spending on the items. Ask questions like what do you need the most, what do you want to buy, and what type of things can we do without? Having a conversation is great because it forces kids to think and allows you to ask the right questions. You will be surprised at how much more open and creative your kids will become once you start a conversation about saving money! Kids budgeting

 Takeaways 

  • Saving money is a habit you can teach their children at a young age.
  • Start by explaining important concepts such as saving and budgeting.
  • Providing an allowance teaches the value of money.
  • Link allowance to chores to teach the value of hard work.

Start your children by savings in a piggy bank, transition to a real bank as soon as they can grasp that concept, somewhere around 8 years old. Kids budgeting

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