My boy has just completed his 12th birthday and my beautiful daughter is 16 now and this is the time they should know how to handle their money.....so this year I decided to teach them about managing funds and how to save and budget money.
Kids and money generally don’t mix well, and that’s a known fact. There’s a good reason adults are generally the ones responsible for handling the finances of a household, and until a certain age, kids simply can’t be trusted with their own finances. That said, there’s a lot you could do to improve their senses in this regard while they’re still young, and to set them up on the right path for the future.
Teaching kids to budget money boils down to a few important factors, and it’s critical to get this done as early as possible in their lives if you want to see them grow up responsible and with the right kind of attitude for adult life.
Set an Example
It all starts with you. As the parent, it’s up to you to set the right example for your kids, and to show them how they’re supposed to budget their money and to handle their finances. Start small – a kid doesn’t need a budget of the same scale as your own. The important thing is that they actually stick to it and understand the importance of following it diligently. If your child doesn’t understand any aspect of their budget, explain it to them. Don’t just tell them “you get X per week” – give a reason for that.
Explain the Value of Money
A large reason for the lack of understanding towards budgeting and finances in general that kids tend to display is that they simply don’t understand the true value of money. From their perspective, it’s something that comes from you and they get to spend. You should take some time to educate your kids about how much a dollar actually costs, how it’s produced, and how much it can buy. Let them buy their own expensive things with their own money, and they will quickly learn that money is actually important.
Let Them Work for It
On that note, one of the best ways to teach kids exactly how much value their money has, is to let them earn it themselves. There are many opportunities for jobs suitable for kids these days, especially with the help of the internet and accounting software like Billage is an all in one tool that unifies invoicing software, banks, crm and task management. And it’s a good idea to get your own kids started on something like this as early as possible in their lives. It will teach them some important habits later on. But most importantly, it will teach them that they need to actually put some effort into getting their money, and that it doesn’t come for free.
Urgent Situations Are an Important Opportunity
And whenever the young ones want to get something more urgently, you should treat this as a valuable learning opportunity. Don’t just buy the thing outright – try to have your kids save up for it. Even if it’s an expensive purchase, that’s all the more reason to go for it. Your kids might not have a very good idea of how much a new gaming console costs. Sure, they see the price tag – but do they understand the amount of work involved in getting that kind of money?
But above all, persistency is the key to success here. You want to make sure that no matter what you do, you keep doing it and keep pushing forward until your kids have shown that they’ve actually learned something. It can take some time, and it can be a long and grueling experience. But in the end, you’ll have the benefit of living with kids who are properly educated about finances. And that’s something very few people in the world can say right now, even in civilized nations!
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