Hi everyone! Today I have a guest post from Johanna. Johanna Cider is a New Zealand based freelance writer who loves writing articles about parenting and lifestyle. You can read more of her work on Tumblr.
There’s no escaping it: adult life revolves, to an extent, around money. When teaching kids how to navigate the grown-up world, budgeting will no doubt be a vital lesson. But just how do you help young children or teens to grasp the importance of money? We’ve done the research and pulled together five easy tips for teaching your kids the importance of budgeting – both for their own benefit and also for your household’s cost-saving ends.
1. Draw attention to your own everyday transactions
They say the best way to learn is to watch – and this dictum certainly holds true
when teaching children about money. Think of all the transactions you’d make in an average day: from supermarket shopping to balancing school fees and paying the bus fare, the average parent flashes a lot of green. Wherever you can – and wherever’s appropriate – alert your child to the kinds of exchanges you’re making, so that they can appreciate from young what goes into running a household.
For instance, in a supermarket shopping scenario, you might hand the reigns over to your child one day. Go through the store and collect the items on your list together, asking your kids to count the total cost as you go, and let them handle the cash in paying for the groceries at the end. This exercise will allow your child to visualize the value of money in a real-life setting, as supposed to games such as Monopoly. Another simple idea to help children understand how money can be exchanged is to organize a yard or garage sale for which your child is the designated money collector.
2. Put them to work
We mean this in the gentlest sense, of course – but getting kids to work for their buck really will get them thinking about the labor-value of money (meaning that they’ll be unlikely to blow it as quickly). You can start this early on: when you’re negotiating your children’s allowance, you might organize a roster of chores that they have to complete to earn their weekly $10. As they grow up, encourage them to get into casual or part-time work outside of the home, and emphasize the importance of their continuing to save for the future.
3. School them on conservation in every sense
One of the hardest things for kids to grasp is that saving money means more than putting away a weekly allowance into the piggy-bank. Living economically also means conserving energy – and since energy conservation is a top priority in any household, this is one lesson you won’t want to miss giving.
Take lighting: rather than automatically turning on the lights when entering a room, let your kids know that they can control light naturally via the adjustment of blinds and curtains. If you need to make the point more material, conduct a family experiment to save as much energy as possible from month to month (with a reward driving the project, of course), and show your kids the difference in your energy bills at the end.
4. Match dollar for dollar (at least at the start)
When it comes to convincing older kids or teens to start saving, the old a-dollar-for-a-dollar promise works wonders. If you can coerce your adolescent into putting away half of their money by promising to match the sum for a few months or more, they’ll be much keen to get a head-start on budgeting. Plus, you’ll often find that most kids learn to appreciate the growth that they see in their bank account, and so sustain the practice of saving long after
you’ve pulled out of the deal.
5. Consider their age
Since a 4-year-old won’t need to know about credit-card grace periods, and a 17-year-old should already know the difference between earned and unearned income, it pays to design your (casually-imparted) lessons in consideration of your child’s age. For instance, a discussion about patience in waiting to buy something is suitable for a 3 to5 year-old, whereas an 11-year-old will be in a better position to hear about compound interest.
Maintaining your parental budgeting lectures will ensure your kid progresses to a new stage each year. Though it should be, this type of practical financial knowledge isn’t always taught in schools, so it’s your job to help your son or daughter understand the realities of budgeting and personal finance.