Money Management isn’t Just for Grownups
If you’re like most Americans, you’ve probably been raised to believe that you must build credit and incur debt in order to make it in society. This just isn’t true! Since budgeting and living within your means is not something schools will teach them, you have to teach your kids to manage their money-or you will likely be the ones they come to when they need bailed out!
Even a kid can do it…
Even the youngest of children can pick up money lessons. Get them a piggy bank and let them start saving their (or your) change. Teach them how to save up for bigger games and toys. Open a savings account for them as soon as you think they are ready, and encourage them to save a portion of birthday, Christmas, chore money etc.
You have to set a good example. Let your children see you budgeting and saving money yourself. Don’t allow them to “borrow” from you, or to spend their emergency funds on non-emergencies. Teach them to truly save their own money. Give them an allowance so that they learn to plan and budget for short term and long term wants and needs. Have them put a small percentage of their allowance or gift money in a separate savings envelope or piggy bank for emergencies. This might be an unexpected invite to a party or a book drive at school.
Another way to help children with money management is by allowing them to be involved in your budget. Don’t hide expenses from them, nor income. Show them how you allocate every cent toward bills, debt, savings and entertainment. Help them understand why they can’t have an extra treat at the grocery store or a new toy today – because it’s not in the budget. The more they see you budget your money, the easier it will be for them when they are out on their own.
Encourage Teens to Manage Their Own Money
As your children grow and reach their teen years, they will probably (and should) get jobs. Whether it’s babysitting, mowing lawns or a newspaper route, be sure you teach your children how to budget their own finances. Start by having them set up a budget based on their income and expenses. You may even require them to help out with a bill or two. Then show them how to set aside some for their emergency fund, food and snacks at school, gas money to get to the mall, and shopping for school supplies and clothing.
By the time your teens are old enough to drive, they should have enough saved up to pay cash for their own car, as well as be able to pay for their car expenses. Gas, insurance and maintenance should all come out of their pocket-not yours.
If you’ve been teaching your children from a young age, or even from their teen years, how to manage money properly, by the time they are adults they will have learned to be responsible-and you will be less likely to get a call asking for a loan!