Teaching your children to be smart with their money is important. You want to start teaching the fundamentals to your kids from a young age. They will know how to handle it more as they grow, which also means they won't have as many money problems when they are older. Read on for tips and pointers on how to keep track of money and to establish budgets for kids.
An important rule to teach your kids, no matter the age, is that money comes in exchange from working. Budgeting Wizard, Dave Ramsey said this, "If your kids don't work they won't get paid." Teaching this early on will enforce a good work ethic in your children as they will work hard to make that money! It's an important lesson that will teach them that money is given to those who work for it.
Be A Good Role Model
Your kids are watching you. Make sure you are being a great role model with your budget too. Are you cutting coupons to save extra money? Do you use the envelope system of spending, saving, and giving? If so, your children will see it.
Commission, Not An Allowance
Don't think of the money as an allowance, think of it as a commission. Your child works and they get paid. But, if they don't work, they wont be paid. Give the accountability to the child and watch how they work hard to earn their weekly commission.
Budgets For Kids: Age 2-5
It is important to help your little ones see their money grow. One really cool idea is to use a see through money jug.
You know those large 32 oz plastic jugs that hold cheese puffs? Once your family empties one, clean it out and set it in a place where your child will see it daily. Then, have your kids fill the bucket whenever they make some money. This will allow them to see their money grow in front of their very own eyes.
Tell them that when their money jug fills up that they can pick what they want to do with the money.
Either:
1. Save the money and get something really awesome later.
2. You can take them shopping to buy a fun toy.
More tips for budgets for kids...
Budgets For Kids: Age 6-12
Budgets For Kids: Age 6-12
Introduce the envelope system to your older kids for keeping track of their money. Take three envelopes and label them with Savings, Spending, and Giving. Try these awesome print off envelopes that also allow your child to write on them. When they add money to the envelope or subtract from it, they'll always know how much they have in their envelopes. This is also a good time to open a savings account for your kids. Whenever you go to the bank your kids can bring their savings envelope and put their money into their account. They will feel quite grown up.
Budgets For Kids: Age 13 & Up
Your teens will probably continue using the envelope system, because they've gotten used to using it over the years. But maybe they'd also like to keep track of their money in a balance booklet, which is a lot like a check book balance book, but meant for all the money that your teen brings in.
At this age you also want to teach them about balancing their checkbook and spending wisely with their debit cards. Plastic money cards are not the answer and are deceiving for many. The confusion all begins because people forget the feeling of money leaving their wallet.
Here is an example: If Todd paid for a $16,000 car on a credit card, he wouldn't feel the impact of the large amount of money leaving his bank account as much as he would if he paid for it in full, with cash.
Another creative idea for budgets for kids is to create a car savings plan. Tell your teen that if they save up for half of a car that you'll pay for the other half. Of course, make sure you set the max price you'd pay and then tell them if they can save that amount, that you'll pay the other half. This really gets teens excited.
Other Ways For Your Kids to Make Money:
Besides paying them a commission for doing chores, you could also set up a cork board with extra jobs on it. Call it the Work For Hire Board which will also allow them to make more money.
Your kids will be thankful that you took the time to teach them the importance of being smart with their money. If you follow these tips, your kids will be headed to becoming financially stable.
For more on budgeting and money planning check out Dave Ramsey's books and lessons.