If you’re like the average American parent, money is often at the forefront of your mind. After all, raising kids is expensive and it only gets costlier all the time – not that most kids recognize this fact.
That’s why, if you want to raise money-conscious young people, one of the best things you can do is to include them in budgeting from a young age. While your preschooler obviously can’t break down the household grocery list for you, there are great ways to engage your kids at every age so that they steadily learn more about money management.
Start With Saving
One of the easiest budgeting skills to work on with young children is saving, especially if you can use visual strategies to do this. For example, if you’re planning a big family trip, you might set out a clear container of some kind in advance and put money in it to spend on items like souvenirs.
Even little kids can see the money pile up and you can count it at intervals to see how much you’ve saved. With older kids, encourage them to count and even graph the savings as they work towards a goal.
Talk Basic Bills
If you’re ready to build on those basic savings skills, consider getting a little more abstract. For example, show your child your electric bill and say that you want to save money next month. Then work together on household strategies that can help you meet this goal, like turning off the lights when you leave the room or unplugging rarely used items around the house.
When you get the next bill, you can compare the two and assess your progress. Looking at household bills can make a big impact on kids who are starting to grasp the value of money and the different ways we use it.
Give Them Their Own Budget
Does your child have an allowance, or do you have a teen with a job? If so, it’s time to set them to work on budgeting their own money. With younger kids, you’ll again want to take a visual approach, such as using a bank with different compartments.
Older kids, however, can benefit from learning to use a teen debit card. These debit cards still limit how much money your teen has access to, since it isn’t directly linked to a bank, but it encourages them to practice saving, setting financial goals, and planning for upcoming expenses.
Set Family Saving And Spending Goals
Most parents consider the idea of a “tax” on their children’s allowance or income to be a bit odd, but there are fair ways to approach this idea, specifically as a way to make collaborative spending decisions. If everyone in the family is putting money into a joint fund, set a shared family purchase goal, or vote on how to spend that money. This is a fund for non-necessities – as a parent, those are still your responsibility – but might mean working towards buying a video game system or even getting a nicer microwave if that’s what the majority votes to do. You might be surprised what your kids see as priorities once you start participating in this exercise.
There are a lot of ways that kids can participate in budgeting and while even teens typically shouldn’t be exposed to every detail, as that can be too stressful and cause inappropriate anxiety, there’s a lot of room to work on building financial awareness.
Whether you’re working with young children to differentiate between wants and needs or teaching older kids that there are consequences for spending money on one thing – that, as a result, you can’t afford something else you want – these lessons will serve them well in the long-term.