6 Ways to Teach Kids How to Budget Money
Look around any college campus and you will find two kinds of spenders: frivolous and frugal. Look further into the world of medicine, business, or education and you might possibly find the same trend. Some of us know how to use our money, and some of us do not. However, we eventually have to do so, and there is a way to give your kids a head start in learning how to budget.
- Weekly Allowance
Shelli Proffitt Howells of Family Share, a website with countless articles on navigating family life, suggests giving your child a weekly allowance as early as age seven. This will inherently teach them the value of a dollar and give them a tangible lesson in making spending choices.
- Clothing Allowance
Howells also suggests calculating how much money you spend on your child’s clothing (once they are old enough) and giving them that amount to spend on their own clothing. Once the money is gone, no more new clothes until the next clothing allowance.
- Money Jars
Budgeting guru Dave Ramsey suggests letting your child use clear jars to collect any cash or change that they accumulate. This is an excellent visual and will help young children to see how their money grows when they save over time.
- Money Envelopes
Giving your child money envelopes is a concept very similar to that of a clothing allowance. In each envelope, divy out how much money you spend on your child’s food and entertainment. For younger children, parents can help them manage the envelope and regularly discuss their spending options.
Most of us feel rushed before holidays and often parents end up buying gifts, then writing their child’s name in the ‘from’ section. An obvious alternative to this is encouraging children to make gifts for their loved-ones, but allowing them to select and purchase the gifts is another great option. They practice independent decision making, putting others first by thinking about what they’d enjoy, and budgeting.
- Set an Example
Most importantly, you as a parent need to set a good financial example for your children. If you budget your family’s money well, your kids have a better chance of growing up to be frugal spenders. If you implement some of these strategies for yourself, it is most likely that your children will follow suit.