As a parent, your responsibilities to your child include helping them learn valuable life skills that will help them grow up into responsible adults. One necessary skill every parent should teach their child is how to be financially smart by learning how to properly budget. Teaching your kids how to budget will save them from having money issues when they grow up as well as teach them how to be responsible.
Teaching kids on budgeting may seem like rocket science but it is not. There are actually easy ways you can get your child interested in learning how to handle their personal finance. Here are easy ways you can teach your child about budgeting.
Be a Role Model
Almost everything a child learns while growing up is learnt by watching adults. This is why it is important that a child have positive role models when growing up. Let your kid see you working on your financials so they grow an interest in them. You can also stir their interest by taking them along on a trip to the bank or when you visit your wealth manager.
Invite Them to Participate
Kids learn by doing. One way you can get your child interested in budgeting is by inviting them to participate when you are drawing up a budget for basic things like that trip to the supermarket. You can give them incentives by planning ahead how much you will spend on sweets for them from the trip. You can also let them have a say in some of the things you plan to buy.
Give them an allowance based on tasks they perform
One key element of teaching kids to budget is allowing them have an ‘income’ they can plan with. Placing them on an allowance based on performing chores in the house or their grades in school also helps them learn to plan on a fixed income. You should plan with them on how to spend their allowance and encourage them to save for short term and longer term projects they may have.
Encourage them to save
You should encourage your kids to save a portion of the money they get through their allowance or as gifts. One important way to do this is to provide them somewhere to save their money. Buying them a piggybank when they are little is a great idea. As your kids get older, you can open a savings account for them in a bank.
Teach them To Differentiate between Wants and Needs
To a child, every want is a need. You can teach your kids about budgeting by sitting down with them to decide what to do with money their money. Teach them the values of budgeting by getting them list their wants on a scale of preference and deciding which ones are the most important and budgeting for them.
Draw a Limit
Do not be too quick to rescue your kids out of a crunch when they misspend from their budget. It is important that they learn that there are consequences early on to bad financial management.
Open an Investment Account for Your Kids.
One valuable way to also teach your kids financial literacy is to open an investment account for them where they can save a portion of their allowances. This is will help them learn how to budget for investments in future.
It is very important that parents spend time building financial literacy in kids. One important way to do this is by teaching them to plan ahead with a budget. It is also important that you allow them participate in managing finances so that it becomes a part of them.