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Tips to teach children how to budget

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It's never too soon to teach children to save

From SheKnows Canada
A budget is one of the most important financial tools in any household. As important as it is for couples to discuss budgets and money, it's just as important to include children in the conversation too.
It's never too soon to teach children to save

Most children don't have the first clue about money, although they watch what their parents do. Some kids want to venture out and make their own money and pretend they are business owners of their own enterprise such as holding a yard bake sale or a lemonade stand. These are two excellent ways to get your child invested in the art of responsibility, customer service and, most of all, earning money for work they've completed.

Budgeting is a life skill and something that is absolutely necessary for any household. If you want your children to learn this valuable skill, then don't skip a beat. Your children should be taught money management at different stages in their lives and in a way that is appropriate for their age.

Start slow

If you want to teach your children about budgeting from a young age, you have to start slow. You can't expect your 4-year-old to start delivering papers and marking expenses he or she has, so be realistic. Ease your child into budgeting, and you will see how quickly they understand how important not spending money is. A bank with different compartments for money to be saved, spent, or donated to charity is a great way to get your younger children to start understanding the importance of money.

It's never too soon to teach children to save

Personal finance education

Not all schools teach finance in class, so it is ultimately up to parents to teach their children the basics behind spending less than you earn and saving money. It's an easy concept to show your children, especially if they have an allowance or a part-time job after school or on the weekends. Don't be afraid to talk to your children about money and even include them in some discussions on your family's budget.

Set an example

As a parent, you know that for your child to understand something you want to teach them, most often you need to lead by example. If you don't budget, then begin now. Start up a budget for your family, and show your children how it's done. Your children will be more apt to continue with their mini budgets if they see how Mom and Dad handle money.

Encourage entrepreneurship

If you're holding a garage sale on the weekend, bake a batch of your favourite muffins with your children, and encourage them to sell them. If you grew up in the '70s or '80s, you might remember the lemonade stand. Selling juice, cookies and muffins might stimulate the entrepreneur in your child, but most of all it will help them understand what it takes to earn money as well as encourage communicating and negotiating with others.

Encourage your child to start mowing lawns for neighbours for a set amount of money, depending on the size of the lawn, to deliver newspapers, baby sit, or walk dogs. Any experience they get working and earning their own money will help teach them valuable lessons for the future.

Weekly allowance

Earning an allowance gives children a sense of independence as well as the responsibility of having to work in order to be paid. Consider offering an allowance for bigger chores at home, not the standard jobs that children should do just to help out the family. Maybe you need a room in your home painted or some yard work done. For younger children, it may be appropriate to pay them a small amount for simple jobs like emptying the dishwasher.

Children can learn the value of having their own money and saving up for something they really want by being paid allowance. It can help form a strong work ethic and financial responsibility.

It's never too soon to teach children to saveJars, envelopes or piggy banks

You can put their money into envelopes, jars or a piggy bank, and then create a small budget with one or two categories and explain to them how a budget is used and how they can budget their money.

You could easily set up a bank account for your child as well. This might make them feel like a "big person" and hopefully encourage them to work hard and save money. Eventually it will be easy for them, and they might ask you to expand the budget for them, or they will want to do it on their own.

Lessons pay off

Watching your child grow up with an understanding about money and how hard you, as parents, worked to put a roof over their heads and food on the table is imperative. It's also crucial to give your children the tools they need so they can make informed decisions along the way. If you teach your children how to budget their money, you are teaching them a life skill that will carry them through into adulthood. Proper management of personal finances is the gift that keeps on giving, and if you want your children to learn how to budget, then show them the way.

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