The desire of any parent is to give their children the best of everything. A son or daughter may be given every treasure this life has to offer, but if they haven't learned how to budget their money well, it could all be gone in a matter of months. History is replete with stories of people who began with great riches and lost them all because of poor money management.
It's important to start early teaching your children how to manage a budget. Here are some ways to do it.
Teaching By Example
One of the best ways children can learn from parents about the process of wise money management and budgeting is by example. If a child sees his father or mother overspending their credit cards on a regular basis and letting overdue bills pile up while buying the most expensive items, a message is sent to children that is very powerful.
Instead, parents can include children in some of their financial decisions to teach them how to save money. An example would be discussing a trip the family would like to take. Parents can join children in a family meeting to discuss how much the trip will cost, and brainstorm how to earn enough money to go on the trip. Children can be encouraged to find age-appropriate ways to contribute to the family need. Such planning teaches children that important things in life must be earned and that there is always a time of waiting for them.
An Allowance That Grows
In order for children to learn about money, they must have at least a small amount of money to begin with. Obviously, when children are small, they will not have any way to earn money unless the parents provide them with that way.
Allowance can be given with or without chores attached to it to earn the money. Both ways can be successful, if the parents teach their children that they must save their allowance for the things they want. Parents should always provide for children’s needs, but there are many simple things a child may want that they can learn to save money to obtain.
Older children should be encouraged to take jobs that are geared especially for children, or even offer to do simple jobs for people in the neighborhood, such as shoveling snow or raking leaves.
Parents should also lead by example in giving generously to outside causes of their choice. Giving is an important principle in any money management program, because it sends the important message that money should be spent on more than just selfish desires. Children should be allowed to choose their own charitable cause, and be encouraged to donate a small portion of their money towards it.
Checking Accounts Designed For Children
When the child is old enough to understand, the parents can open a checking account for the child with a small amount of money deposited. Many banks offer free checking accounts for children. There are also checkbooks made especially for children, with fun designs or logos on them that make saving and spending money in a checking account enjoyable.
An example of this would be cat checks or checks with other animal figures displayed on them. Whenever the child writes up a personal check, he is reminded of his favorite animal.
Children can be taught to write personal checks for school supplies or other smaller weekly necessities. They will need guidance at first in how to write checks and balance their own checkbook, as well as being encouraged to make regular deposits into their own checking account. One of the easiest ways to do this is to bring children with you to the bank regularly, and allow them to watch you pay bills.
Teaching a child how to keep a budget is one of the most important building blocks you can give to him. The lessons learned will help to provide him financial security for the rest of his life.
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