Why your Kids should be Included in your Budget Planning
Several of today’s adults grew up in households where financial matters were never discussed with the kids. However, research has shown that kids who were raised in homes where finances were discussed openly went on to become adults who mastered their money from a young age.
While you may not want to share all aspects of your finances with your kids (unless you think they’re old enough to understand), it is important to give them an idea of how money is earned and how household expenses are covered from month to month.
Start with a Family Meeting
The first step to getting your kids involved in your family’s finances is to hold a family meeting, and this time should be used to discuss the various expenses that your budget covers each month. During this time, give each child a pen and paper and ask them to write down how much they think each line item in your budget costs, such a groceries, rent or mortgage, insurance, vehicle-related costs, entertainment expenses and any other item you pay for on a monthly basis.
Teach Kids that they will sometimes go without
It’s crucial for kids to learn that they will never be able to have absolutely everything their little hearts desire – and the best way to do this is to be open with them about how much it costs to live from day to day. Show them that money is by no means an infinite resource, so it will be necessary for them to sometimes save up for a specific item they want.
Provide an Allowance from an Early Age
One of the best ways to teach children how to allocate any money they receive is to set up an allowance system – preferably one that is linked to some form of work having to be done in order to earn these funds.
For younger children, a simple system of saving a small portion of their money and being allowed to spend the rest is sufficient. However, as your kids get older and obtain a better understanding of money, they can be taught how to have a basic savings account, a little something for investing, a small portion for donating to a charity or cause of their choice and the remainder for spending however they like.
They will Learn how to become Financially Independent
Once your kids know how money is earned and how to budget appropriately, they will usually go on to become adults who budget efficiently, avoid debt as much as possible and invest wisely over time. However, in order for them to do this successfully, they will need to see you putting these principles into practice as well – it’s no use telling them to budget and save if you aren’t doing so yourself.
If you would like to learn more about teaching your kids how to manage their finances and make the best investment choices possible, contact our team today.