Budgeting is an easy concept to comprehend but far more challenging to implement. While we are taught the importance of budgeting from a young age, yet most of us fail to follow it while growing up. This is due to lack of handholding while using simple tactics to save money.
As parents, giving the proper knowledge to our kids from a young age will not only nurture financial wisdom among them but also build their ability to manage any financial crisis.
Kids have a mind that can be easily moulded, so getting them acquainted with the basics of budgeting is not a very big challenge. Here are 5 great ways to teach your kids the basics of budgeting
- Invite them to be involved
Include your kids in your basic budgeting. This can start with you involving them in spending your budget at a grocery store. Eventually, as they grow older, you can include them in more significant budgeting decisions to build their confidence and give them practical experience.
- Visualize savings by using a glass savings jar
Using a piggy bank is an old and practical idea. However, your kids can’t see how much they have saved and hence may not be as motivated to save as you’d want them to be. So instead, use a glass or transparent jar which allows your children to see their money add up.
- Teach them the importance of balance
Excess of anything is wrong. If your kid believes in saving most of his money in a jar and spends very little or vice versa, then teach them how to strike a balance. Not rewarding oneself for achieving budgeting goals can be very exhausting. We suggest inculcating a habit of saving 10% of their total money at a young age is a fair expectation. However, the giving and spending ratio can be set anywhere between 10%-89% to 45%-45%.
- Set an example as parents
Kids walk on the path that we set for them. They grow up watching us and picking up our habits. While most parents use this to avoid displaying bad characteristics in front of their kids, you can use it to model good money habits. Show them that debt is a thing that they should avoid at all times as it comes at a high price. If you find it hard to manage your finances, read the right books, listen to podcasts, or register for webinars, that will help you change that. While you do that, you can share your learnings with your kids and have conversations with them about money and wealth.
- Let them work for their allowance
We can’t value something that they get quickly. Kids are the same! Inculcate the value of money in kids by “paying” for the little chores they do around the house. You can set different amounts for different jobs based on the level of hardship. This will teach them that money is earned and help you get more help around the house—a win-win for both.
The easiest and most effective way to teach a kid anything is by making it fun for them. While budgeting isn’t a topic that they’ll discuss during sleepovers, it can still be fun to learn about. Make the experience more interactive and enjoyable by playing games like Monopoly or giving them comics or books that teach about the value of money. As they age, you can change your methods to make them more relevant. Keep it fun!