Teaching Your Children How To Budget

As adults, we understand how important it is to properly budget your money in order to live a comfortable life. However, it’s important to make sure our children are just as aware of how budgets work and how to manage their own money. Lessons on budgeting and money management can be as simple as teaching your five-year-old what happens when they spend their birthday money on a new toy or as in-depth as teaching your high schooler how to file for taxes. When you’re ready to begin the conversation of budgeting with your child, let Landmark National Bank help with tips and tricks for teaching your child how to budget.

How To Teach Budgeting to Children of Different Ages

 As your children get older, you will want to make sure you are tailoring your budget lessons to the phase in life they are entering. For example, as you begin to teach younger children about the value of a dollar, you will want to start with tangible, paper money to help them better understand how money disappears when you spend it. However, once they enter high school, it is much more helpful to digitize their money so they can begin to learn about checking and savings accounts before they go off on their own.

You will also need to think about major milestones that happen throughout a child’s life such as when they might start their first part-time job, begin applying for scholarships, or receive their first car. Below, you will find budget tips for young children, preteens, and teenagers to help you navigate the waters of teaching your children how to budget.

Budget Tips for Young Children

 

It is best to begin the conversation about money as early as you can with your children. Use your best judgment when it comes to beginning this conversation. However, you can start once they have tangible concepts of money or numbers, which is normally around five. As stated above, it is best to begin the process of teaching your children about budgeting with coin and paper money. At this stage of development, children are not able to fully grasp abstract concepts and need to see what is happening right in front of them in order to fully understand.

The easiest way to start the lesson on budgeting is to begin giving your children an allowance. There are two schools of thought when it comes to how you choose to dole out the allowance to your children. Some believe that this allowance should be attached to the children doing chores in order to teach them how to earn money. Others think that this teaches kids that chores are a way to earn money and not something that should just be done to keep the order of the house. Both methods have their own pros and cons, so it is truly up to your best judgment which method to use.

However, there is a way to start a hybrid method of allowance by giving your children a weekly allowance and then giving them a chance to earn additional money on top of that for “special chores” such as bathing the dog, washing the car, and mowing the lawn. With this method, they can both learn what it means to earn money and be taught that chores should be done to contribute to the family unit.

You will also want to set up a system for how they will spend their money and where the money will be kept. Many parents use jars or piggy banks to help their children see what happens when they choose to spend money. You can also teach kids how to divide their money to spend on necessities, fun items, and charities with color-coded jars. This will begin the conversation of learning to properly budget in a fun and easy-to-digest way.

Budget Tips for Preteens

 Once kids begin maturing and learning more concrete mathematical concepts, the budgeting lessons can begin to increase in difficulty as well. At around the age of eight or nine, children can begin learning about tax and how to calculate it each time they purchase an item. You can also begin to throw in other valuable skills that still teach children budgeting concepts.

One example of this would be to have your children be in charge of planning and executing a meal each week for the family. Give them a set budget for how much they can spend on the meal, have them purchase the items with you on your grocery trip, and then have them actually cook the meal with proper supervision. This begins the conversation of learning to cook and how to plan a meal for a family while also showing them how you budget for weekly meals.

This is also the age that preteens begin taking on odd jobs around the neighborhood such as raking leaves for neighbors or babysitting when they turn eleven or twelve. This means that they will have another source of income other than the allowance you have been giving them. This may be a good time to set them up with a youth savings account from Landmark National Bank. This type of savings account is the perfect way to teach your children about how interest works and what having a savings account can do for them in the future.

Budget Tips for Teenagers

The teenage years are some of the most important when it comes to teaching your kids how to properly manage their money. This is the time when most teens will get their first part-time job and begin truly seeing the value of hard-earned money. Teens are also starting to handle abstract ideas, making it a great time to start digitizing their money and opening an Everyday Spend Checking account at Landmark National Bank.

It is also a good idea to start teaching them more in-depth budgeting terms and concepts. Teens should learn how to properly use a credit card, file taxes, and create a monthly budget. Giving your teen a bill to pay each month can be incredibly helpful in teaching them how to take care of necessities over frivolous purchases. Have them pay for their own gas in their vehicle or give them a portion of the cell phone bill to pay for each month. This will hopefully give them a real-world perspective on how to budget with a low-stakes example.

Preparing for College

If your child plans on attending college, a very serious conversation needs to take place about how it is going to be paid for. While it is ideal to pay for it all out of pocket and not take out any loans, that is not always possible. Make sure your child understands what happens when a loan is taken out and when interest begins to accrue. Teach them to only take out the minimum amount that they realistically need and encourage them to work a part-time job if they are able.

You will also want to hit a little harder on the importance of their savings account when it comes to preparing for post-graduation. The conversation about what they are going to do with their lives after they are done with high school becomes much more serious by the time they are 16. College applications are being filled out, some are starting to consider joining the army, and others are searching for full-time jobs. It’s important that they have money saved up for college, an apartment, or any other living expenses they may have. Encourage them to place a portion of the money they are earning into their savings each month to set themselves up for success.

Open a Youth Savings Account With Landmark National Bank Today

When it comes to teaching your child how to budget, it is important to make sure they are given the proper tools to do so. At Landmark National Bank, we can help you set your child up for success with helpful checking and savings account options. We have plenty of options that make it easy for your children to understand how money and budgeting work. When you’re ready to open an account for your children, find your local Landmark National Bank.