How to Teach Your Child About Budgeting
Life is expensive and everything you choose to do in life will cost money – for the most part! If you are smart about your finances, then you will know how to budget accordingly and it’s quite likely that lists are your friend. Planning, preparing and making lists will mean you never fail when it comes to minding where every penny comes from and where each of those pennies go to.
Teaching children about budgeting early in life is important. Children have no concept of money and it’s evident when they ask for every toy and clothing item that pops up on a television advert. Peer pressure has a lot to answer for when it comes to money, as with the latest and greatest style trends out there, children always think they need the most expensive of everything. The secret? They don’t.
It’s not easy to say no to children when they want to match what latest labels their friends are wearing, but sometimes needs must. Not every adult is equal in their salary packet and this can cause issues – especially with teenagers. You can avoid these issues by teaching them early how money and household finances are spent so they can understand why you have said no if they have asked for a new outfit or toy.
It doesn’t mean you don’t love your kids; in fact, you’re doing them a favour. By teaching them how to earn their way in the world, they won’t go into adulthood with a skewed view of how they can be successful. As a parent, it’s your job to teach your child that mummy’s purse is not a bottomless pit and if they are told why you budget, why you plan and why they don’t have the latest console, or the latest ooh la la couture dresses, they can develop a sense of understanding from a very early age. It’s a good idea to introduce a basic version of financial planning to your child and you can do this with pocket money.
If you have a chore list, you can choose to use small amounts of pocket money for them to collect at the end of every week and put a price on a completed job in the house. Each Friday can be ‘payday’ for pocket money but don’t fall into the trap of paying them for jobs they should be doing. If you think making their own bed every day is something they could be doing without being paid for, don’t pay pocket money for it. Pocket money is usually for jobs that are above and beyond their usual chores. Pocket money is a great teaching tool as they can feel like they earned their weekly treat instead of just receiving a treat for no reason. It will also help you to explain that they can spend their pocket money if they wish, or they could save up for a toy they’d like to buy and feel some accomplishment that they earned the money themselves.