As your children grow older, it is important to introduce additional money strategies. While they live in your home, it is the perfect opportunity to teach them critical financial skills that can help them as they move on in the world.
Once your children can grasp the concepts of allowances, saving, and tracking spending, the next step is to teach them some basic budget skills. Older kids may even enjoy doing this on the computer.
Start by first sitting down with your children and show them your budgeting system. Talk together about the whys and whats of a budget. Explore ways they think would be easy for them to start one.
Help them set up a basic budget. This may be a good time to put them in charge of a regular expense like paying for their school lunch, setting up a clothing account, or if they are older… paying their own car insurance. Even if you are actually the one giving them the money for these expenses, an important part of a budget is also learning to manage bills.
Once you have a basic budget with categories appropriate to your child’s age and money needs, you will also want to create a payroll style arrangement. One idea is to still do a weekly allowance for fun and entertainment, and then do a monthly stipend for the core expenses. Another idea is to give your child all the money at the beginning of the month, forcing her to truly budget his needs throughout. The decision on how to distribute the money will depend on how ready your child is to actually start on the path towards good money management.
Once you have the arrangement set up, step back a bit. It is okay if they fail and run out of money early. It is better they learn this while at home, safe with you, instead of out on their own. Try not to rescue them, instead create natural consequences like not being able to drive the car until they have money for the insurance or having them make their own lunches at home until they get enough money again to buy lunch.
This sort of early introduction to finances will help your children practice some crucial skills and prepare them for the harsh reality of real life.
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