Are you on an emotional roller coaster ride each time your child asks for something? Do you feel as if there’s too much of the month left when your money runs out? There are pizza lunches, school fundraisers music lessons, gymnastics – the list goes on. If your children are regularly in need of money, then it’s time that they learned the value of money. Involving the children in the family budgeting will help them understand the costs of running a household and teach them to become smart spenders and savers.
It starts with communication – call a family meeting to talk about money. Explain to your children the monthly costs of rent, heat, hydro, food, vehicle expenses, etc. and show your children what is left over. Even young children can participate in these discussions and older children will learn to understand how money works in the real world. Once the family calculates how much money there is to work with after all household needs are paid, let everyone suggest a savings goal that your family can work towards. Parents may suggest saving for a new car, where the children may suggest a new bike, vacation or special outings, etc. Vote on at least one short term goal so the family can work together towards that goal and the children can learn the satisfaction of meeting a financial goal.
Include the children in buying decisions for large, expensive items for the home – explain why these things cost so much, their value and why it is important to take care of them to maintain their value. A few more ideas that will give children a sense of responsibility and an understanding of the value of money are as follows:
- Let them plan the grocery list, look through store flyers for sales and go shopping with you – this way they can compare brands and costs;
- Teach them to understand the work/wages exchange by showing them how many hours you work, what you have to do and how much you get paid;
- Compensate them for small jobs done around the house;
- Open bank accounts for the children so they can deposit any earnings and watch the balance grow with interest;
- Teach them to donate a portion of their earnings to a charity of their choice.
When your children are old enough to receive an allowance, they are old enough to learn about budgeting. Teaching them how to spend wisely is an important lesson they’ll use throughout life, so start early.