We often think of childhood as a responsibility free zone where kids can just be kids and not worry about finances or budgeting. And while it’s true that they should likely be free of financial worry at this stage, there’s no reason they can’t start learning about financial success.
One of the first steps to financial success (as we all know) is budgeting. You can’t achieve success without knowing the aim of the game, and what players you must work with. So, this article is going to overview just a few simple things you can do with your kids to get them started on budgeting, even from an earlier age.
Step 1) Talk about money
Sit down with your young one and figure out what their thoughts are about money right now. What is it used for? What do they want that they don’t have? What do they need that they know they’ll need cash for? These are the same first few questions we often ask ourselves as adults setting a budget, and kids are not different. By asking these initial questions you can help them begin to form a plan for where their money should be going.
Step 2) Start small
This doesn’t have to start with their first job, it can start with their allowance. Or even by letting them see you using vouchers or shopping the sales, to encourage them to learn healthy habits like bargain hunting. So, start small, start young, and you’ll be amazed at how quickly your kids take to saving.
Step 3) Teach your kids the save, share, spend method!
Save: Every time your child is given (or earns) money, they should be saving at least a portion of it. Getting them started on this young, so it doesn’t feel like something new to learn so much as a familiar habit. Set aside 10% of their allowance with them for future goals. Help them develop savings envelopes for the goals that they already have. Use a piggy bank or basic savings account to show them the importance of setting money aside from each pay check.
Share: This means getting kids involved in charitable giving. Sit down as a family and decide on a charity to give to, as well as how much each child would like to give. Be open here to finding a charity your child can be passionate about too, so that giving will feel good. Teaching children to give now will only encourage this type of behaviour later, and is a great way to subtly remind of the need for budgeting.
Spend: Whatever is left after saving and sharing is spending money. Teach your kids that some discretionary spending is okay, but to always be mindful of where their dollars are going. Teach them to hunt for a bargain, and that the less they spend now, the quicker they reach their savings goals.
The work you’re doing now is going a long way to laying the ground work for a solid financial future. By teaching kids to save before they think of spending their entire earnings, you’re helping them develop good habits before bad habits ever enter the picture. This doesn’t mean they’ll never make a mistake, but it does mean they’ll have a solid educational backing as to what to do to correct one. Start teaching your kids to budget today!