Budgeting is the saddest of concepts — and one of the most unavoidable. The middle-class limitations can’t be denied. They must instead be embraced, understood as inevitable… even by children.
It’s tempting to shield youth from finance, to deny the truth of funds; but that truth must instead be mastered, recognized for its demands and its limitations. Children must become aware of money to appreciate what their parents struggle with. Teaching foundational knowledge should therefore be considered vital — and you’re not immune to this.
Examine dollars with your children and outline:
One: Cost Explanations. Numbers are to offer more meaning than repetition. Amounts are to be understood as more than mere words. When children can grasp the concept of counting (understanding the difference between pennies, quarters and beyond) it’s imperative that parents detail the true cost of living. Don’t let your sons and daughters assume that all items are easily obtained. Stress the true value of each purchase and why some are more important than others. Differentiate between needs and indulgences.
Two: Determine Goals. All children have desires, certain items they crave. Allow those items to become goals for any age. Create a savings account (as well as a checking account) so that youths may prepare for major expenses — placing their allowances in the bank and gathering interest. This will stress the importance of budgeting dollars and establish patience: a necessity for all future spending. Track all amounts and teach proper record keeping.
Three: Credit Introduction. It’s never too early to establish credit. Children should be encouraged to experience the convenience of plastic. Through the use of a prepaid credit card they can gain an understanding of how immediacy can affect their spending habits. The limitations of money can be explained — which will lead to wiser choices and fewer impulse purchases. All dollars will instead gain importance.
Budgeting can’t be denied. Accept this and then pass the knowledge to your children.