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5 Ways to Teach Your Kids to Budget
Teaching your kids to work with a budget early on pays off for them down the road. Even when they are young, kids are capable of understanding the basic idea of budgeting. And as they get older, they can develop good habits by being included in your own budget planning. Here are a few great ways to teach your kids the importance of budgeting.
- Invite them to participate. Ask your child to help you find the price of items at the grocery store. Teach them to compare prices in order to find the best bargains. You can also give them a budget to work with and ask them to come up with a grocery list for the weekly shopping. Help them look through kitchen cabinets and the refrigerator to figure out what they need for the week. Then review the list with them before going to the grocery store to make sure they haven’t missed anything. While shopping, give them a calculator to add up the cost of items they put in the cart. Show them how close they are to your budget as you add more items to the cart.
- Use a clear jar to save. A piggy bank is a great idea, but it doesn’t give kids a visual. Using a clear jar will allow them to see their money growing. Yesterday, they had a dollar bill and five nickels. Today, they have a dollar bill, five nickels and two dimes! Make a big deal about it with them!
- Set an example. Kids are always watching you. If you’re slapping down the credit card every time you go out to dinner or go shopping, they will eventually pick up on this. Teach them that debt isn’t good and comes with a price. Show them that it’s better to only buy things you can afford and pay off credit cards right away so you don’t incur interest. Set a healthy example for them, and they’ll be much more likely to follow it when they get older.
- Give them a “job”, not an allowance. Don’t just hand your kids money for doing nothing. Instead, pay them a wage based on chores they do around the house. Different chores can earn different wages. Taking out the trash can earn $2 while cutting the grass might be worth $15. This will help them understand that money is earned; it’s not just given to them. As a bonus, you’ll be more likely to get help with the household chores!
- Make It Fun. Younger kids tend to learn better by interacting and experiencing so make it fun. Play games like Monopoly; look for comic books or children’s books about money. When they’re older, get them financial literacy books like Rich Dad Poor Dad for Teens and show them websites about financial budgeting and planning for teens.