How to Teach Your Child About Budgeting
Set good examples., Open an interest-bearing savings account for them., Store your pocket change in a clear jar., Show your child that things cost money., Give them an allowance., Help them divide their allowance., Review the family budget with your...
Step-by-Step Guide
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Step 1: Set good examples.
Pay with cash instead of credit cards.
Don't buy things on impulse.
Let your child watch you comparison shop.
Bring them to the bank when you put money into your savings account.
Explain what you're doing while you're doing it., Deposit the money they receive as gifts if they're very young.
As they near the end of grade school, let them spend about 80 percent of what they receive.
Save their monthly bank statements and create a graph to show them how the interest on their account is making more money for them.
If you don't have enough money for an initial deposit, store the money in a piggy bank until you save up enough., Choose glass or plastic as long as it's see-through.
This will allow your child to see money accumulate over time.
Point out each deposit and how it makes the pile of money grow larger., Have them take a few dollars out of the jar after you've let the money accumulate for a while.
Bring it to the store to buy something for them.
Then, let them watch you hand the money to the cashier to pay for the item(s).
This visual demonstration will stick with them longer than a lecture will., Start with a small amount as soon as they're old enough to understand that money can buy things.
Pay them their age (or half their age) in dollars (pounds, Euros, yen, etc.) each week.
For example, if your child is five years old, give them $5 per week., Pay them in bills and coins that they can deposit into different containers designated for different purposes.
Let them keep 80 percent of their allowance for spending.
Then, have them put 10 percent into long-term savings for large purposes and 10 percent into short-term savings for smaller purchases., This is especially helpful if you're also trying to teach them to help cut down on expenses.
Show them how much money you earn each week.
Explain that they can't spend more than that amount.This step requires quite a bit of trust.
Explain to your child that details of the family budget should not be discussed outside the family. , Have them look in the kitchen cabinets and refrigerator to figure out what the family needs for the coming week.
Then, review the list with them before going to the grocery store.
While shopping, hand them a calculator to see how close you are to your budget as you add more items to the shopping cart.
If money is tight, try planning your meals around what's on sale and which coupons are available.
Have your child look through store circulars and help you clip coupons., At the store, ask your child to find unit prices on items.
Have them divide the price by the net weight or number of contents in the package.
This will help them to become more frugal shoppers.For example, a 5-oz. bag of chips costs $3, while a 10-oz. bag costs $5.
If your child does the math, they'll find that the $5 bag is the better bargain at $0.50 per ounce (as opposed to the $0.60 per ounce on the $3 bag). , Explain what they can and can't buy based on how much they've saved.
Tell them that they might have to wait to buy the things they don't really need if they come up short.
Turn it into a math lesson as an educational bonus.For example, their account balance is $100, but they want a $60 video game and a $50 jacket.
After some simple addition, they'll discover that they don't have enough money for both.
They'll have to choose one or the other. , Consider it a reward for doing their chores.
Tell them that if they want to save up for shoes before the store's sale ends, they'll have to work harder for the money.
This will teach them that they must earn money and not just expect it to come out of nowhere.Assign a different monetary value to each chore.
It might help to pay more for the less appealing chores.
Let's say your child hates washing the dishes but doesn't mind mowing the lawn.
Pay them $1 more for dishwashing. , Learning how to write checks, balance an account, etc. will lower the risk of budget shortfalls in adulthood.
Start as early as possible, while your child is still at home and the consequences for mistakes aren't as severe.
Set up the account with your child and monitor their spending habits.Not all banks allow underage teens to have checking accounts, but it's worth calling around to find one that does.
If you hit this problem, give them control of their savings account., Emphasize that credit cards are borrowed money and that debit cards are automatic withdrawals from their bank account.
Show your monthly statements to your child.
Highlight the section on your bank account statement that itemizes debit card expenditures.
If you keep a balance on your credit card, point out the information explaining how long it will take you to pay the balance off., This will teach them to manage their money and their time.
Seek out local businesses that are willing to work with high school schedules.
Help your child fill out job applications and make good impressions on prospective employers., While you shouldn't charge them rent just yet, remind them that luxuries are their responsibility.
This includes expensive clothing, entertainment, and gas fill-ups.
If they don't want to drive the family car, help them figure out how much they'll need to save until they can afford their own wheels.
These lessons will prepare them for the responsibilities of adulthood., Most teens know how to keep track of money, but many blow through it before the next payday.
If this happens with your child, allow them to experience the consequences of their actions.
Remind them that you won't always be there in the future and to use this as a teachable moment. -
Step 2: Open an interest-bearing savings account for them.
-
Step 3: Store your pocket change in a clear jar.
-
Step 4: Show your child that things cost money.
-
Step 5: Give them an allowance.
-
Step 6: Help them divide their allowance.
-
Step 7: Review the family budget with your children.
-
Step 8: Let them help with the shopping list.
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Step 9: Teach them to comparison shop.
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Step 10: Make a spending plan.
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Step 11: Have them work for their allowance.
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Step 12: Help them open a checking account
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Step 13: if possible.
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Step 14: Warn them about credit and debit cards.
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Step 15: Encourage them to get a part-time job.
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Step 16: Let them pay their own way.
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Step 17: Don't bail them out.
Detailed Guide
Pay with cash instead of credit cards.
Don't buy things on impulse.
Let your child watch you comparison shop.
Bring them to the bank when you put money into your savings account.
Explain what you're doing while you're doing it., Deposit the money they receive as gifts if they're very young.
As they near the end of grade school, let them spend about 80 percent of what they receive.
Save their monthly bank statements and create a graph to show them how the interest on their account is making more money for them.
If you don't have enough money for an initial deposit, store the money in a piggy bank until you save up enough., Choose glass or plastic as long as it's see-through.
This will allow your child to see money accumulate over time.
Point out each deposit and how it makes the pile of money grow larger., Have them take a few dollars out of the jar after you've let the money accumulate for a while.
Bring it to the store to buy something for them.
Then, let them watch you hand the money to the cashier to pay for the item(s).
This visual demonstration will stick with them longer than a lecture will., Start with a small amount as soon as they're old enough to understand that money can buy things.
Pay them their age (or half their age) in dollars (pounds, Euros, yen, etc.) each week.
For example, if your child is five years old, give them $5 per week., Pay them in bills and coins that they can deposit into different containers designated for different purposes.
Let them keep 80 percent of their allowance for spending.
Then, have them put 10 percent into long-term savings for large purposes and 10 percent into short-term savings for smaller purchases., This is especially helpful if you're also trying to teach them to help cut down on expenses.
Show them how much money you earn each week.
Explain that they can't spend more than that amount.This step requires quite a bit of trust.
Explain to your child that details of the family budget should not be discussed outside the family. , Have them look in the kitchen cabinets and refrigerator to figure out what the family needs for the coming week.
Then, review the list with them before going to the grocery store.
While shopping, hand them a calculator to see how close you are to your budget as you add more items to the shopping cart.
If money is tight, try planning your meals around what's on sale and which coupons are available.
Have your child look through store circulars and help you clip coupons., At the store, ask your child to find unit prices on items.
Have them divide the price by the net weight or number of contents in the package.
This will help them to become more frugal shoppers.For example, a 5-oz. bag of chips costs $3, while a 10-oz. bag costs $5.
If your child does the math, they'll find that the $5 bag is the better bargain at $0.50 per ounce (as opposed to the $0.60 per ounce on the $3 bag). , Explain what they can and can't buy based on how much they've saved.
Tell them that they might have to wait to buy the things they don't really need if they come up short.
Turn it into a math lesson as an educational bonus.For example, their account balance is $100, but they want a $60 video game and a $50 jacket.
After some simple addition, they'll discover that they don't have enough money for both.
They'll have to choose one or the other. , Consider it a reward for doing their chores.
Tell them that if they want to save up for shoes before the store's sale ends, they'll have to work harder for the money.
This will teach them that they must earn money and not just expect it to come out of nowhere.Assign a different monetary value to each chore.
It might help to pay more for the less appealing chores.
Let's say your child hates washing the dishes but doesn't mind mowing the lawn.
Pay them $1 more for dishwashing. , Learning how to write checks, balance an account, etc. will lower the risk of budget shortfalls in adulthood.
Start as early as possible, while your child is still at home and the consequences for mistakes aren't as severe.
Set up the account with your child and monitor their spending habits.Not all banks allow underage teens to have checking accounts, but it's worth calling around to find one that does.
If you hit this problem, give them control of their savings account., Emphasize that credit cards are borrowed money and that debit cards are automatic withdrawals from their bank account.
Show your monthly statements to your child.
Highlight the section on your bank account statement that itemizes debit card expenditures.
If you keep a balance on your credit card, point out the information explaining how long it will take you to pay the balance off., This will teach them to manage their money and their time.
Seek out local businesses that are willing to work with high school schedules.
Help your child fill out job applications and make good impressions on prospective employers., While you shouldn't charge them rent just yet, remind them that luxuries are their responsibility.
This includes expensive clothing, entertainment, and gas fill-ups.
If they don't want to drive the family car, help them figure out how much they'll need to save until they can afford their own wheels.
These lessons will prepare them for the responsibilities of adulthood., Most teens know how to keep track of money, but many blow through it before the next payday.
If this happens with your child, allow them to experience the consequences of their actions.
Remind them that you won't always be there in the future and to use this as a teachable moment.
About the Author
Danielle Nelson
Experienced content creator specializing in cooking guides and tutorials.
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