How to Help Your Kids Understand the Family Financial Budget

Between You, Me and the Lamp Post

How to Help Your Kids Understand the Family Financial Budget

Very few children know the value of money.  They see that their friends have the latest electronic gadgets, designer clothing or fashionable jewelry and they want it too.  They have no idea how much those items cost or whether or not Mom and Dad can afford them.  If you’ve ever wondered how to help your kids understand the family financial budget, the following tips might help.

As soon as children are old enough, tell them how much you earn and show them what kind of bills have to be paid on a monthly basis.  Talk to them about the mortgage/rent, the hydro bill, phone bill, credit card and anything else that needs paying.  Write all payments down, add them up and deduct them off your income.  Seeing how much is left will make them understand what a family budget is.

Let children accompany you on grocery shopping trips and let them see the bill.  While shopping, individually priced items may not make much of an impression on them, but seeing it added up might open their eyes just how expensive groceries are.  If you are paying with a credit card, show them the statement at the end of the month.  For a lot of children a credit card is a magical card that pays bills, but they don’t take into account that that card has to be paid too.

Teach your children about shopping around and practice what you preach.  The next time you need shoes, a sweater or washing liquid, take the kids along and show them that shopping around might help them save a significant amount of dollars. When they see how much you save by visiting more than one store, chances are they will do the same.

Introduce your children to earning their own money.  Don’t just give them an allowance, but give them tasks to do and pay them accordingly.  They will soon find out that it takes time and effort to get a particular sum together.  If you want them to learn the value of money, let them get a part-time job when they are old enough.  Nothing teaches kids more effectively about money than having to work for it.

It might also be a good idea to let them have their own savings account.  Not just a piggy bank in which they save a few coins, but a proper bank account that pays them interest and with which they can see their savings grow.  With a growing savings account they might prefer to put money aside instead of spending it.

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