A lack of budgeting skills is cited as one of the core problems causing millennials financial distress.
People of all ages are often left wondering where their money went at the end of the month when it’s time to pay the bills!
As Dave Ramsey says, “creating a budget is telling your money where to go instead of wondering where it went.” How can we pass down budgeting skills to kids at a young age? The earlier our kids can grasp this fundamental money management skill, the better– the good news is that they’re often capable of learning much more than we think. Sticking to a budget may not always be easy, but it is simple, and the benefits of helping children learn it are many.
Many kids struggle to grasp the fact that money is finite. One mom described a scenario where she declined to buy a toy for her child, explaining that she didn’t have enough money. Her son promptly motioned to the ATM, telling her to “go get more money out of that machine!”
In an increasingly digital world where young kids see less and less cash exchanged on a daily basis, they’re prone to thinking money comes from a bottomless well we can draw from instantly with our plastic cards and smart phones.
We’ve been tasked with making the intangible tangible, in a way young minds can understand. Here are some ways we can teach our kids budgeting skills young.
1. For younger children, using cash is very helpful. In time, you’ll need to shift to teaching your kids to use money on digital platforms since that’s what we’re all using in the real world now, but little ones will grasp money concepts most easily if they have something physical in front of them. Illustrate budgeting basics by labeling jars or envelopes: “save,” “spend,” “donate”, get creative! Jars work better than piggy banks, so your kids can actually see the money growing inside. Labeling a jar for something specific they want to buy with their own money can really help motivate good saving habits. Teach them how to sort their money wisely into these categories.
2. Help your kids make the connection between money and effort. For young children who have never worked a day in their lives, the connection between money and work is not intuitive. While there’s some controversy whether or not we should pay our kids for doing chores around the house, it’s important to impart to your kids that money is the result of effort. Many parents make it a point to teach their children to help care for the family without getting paid for it. If this sounds like you, there’s a great solution to the dilemma: offer your child money to go “above and beyond” their usual baseline of chores. Create a schedule of “just-because” chores, with a few additional options they can pursue if they want to make some money. This method enables you to teach the importance of household care and the money-effort connection in one fell swoop.
3. Include your kids in family budget planning in age-appropriate ways. With older kids, it’s helpful to demystify the process of budgeting in your own family. It’s important that they’re old enough to understand privacy and boundaries; by 7th and 8th grade, students are generally old enough to understand that family salaries are to be kept private from their peers. Including them in planning how you’ll spend money on family vacations together is a great way to empower them and make them feel like they’re helping on the adventure!
Budgeting is one of those habits that will serve a person well for a lifetime if it’s built from a young age. As we wait longer and longer to implement these skills, it becomes more difficult to change habits. Teaching your kids budgeting from a young age, even in small ways, can carry a huge positive impact on their financial future.
Installing Jassby is a great way to empower your kids with the freedom to start making responsible financial decisions from day one!
Jassby is a free mobile payments system for the whole family. Parents can give their teens money for rewards, accomplishments, gifts and more; teens can learn money management by saving or shopping from an parent-approved list of online vendors. When it comes to money matters, Jassby is part of the family.