Children learn their budgeting skills from their families. Here are some activities you can use to teach your own child how to budget and save.
Allowance Scenario
Most children receive an allowance of some sort, whether it is based on age, grades received in school or chores performed around the house. If your child already receives an allowance or if you are about to set up an allowance system, then the "allowance scenario" is a perfect way to teach children about budgets. For example, let's say your child receives $5 a week. Depending on your family's situation, you will need two to three piggy banks, shoeboxes or moneyboxes. If your family believes in tithing 10% to the church, as many families do, then instill that value into your child early on. Have your child label the three chosen money containers. One would be labeled "Church," one would be labeled with the child's name and the other would be labeled "Savings." Have your child put 10% of his/her allowance (in this case, 50 cents) in the "Church" box. Every Sunday, your child can begin tithing to the church on his own. Teach your child the concept of "paying yourself first." Let them know that by paying yourself first, you can save up for important things later on like nice vacations, nice cars or college. Tell your child to put about 40% (in this case, $2) in the "Savings" box. The other box should contain the remainder (in this case, 50% or $2.50) and be used for any daily expenses that may incur, like ice cream from the ice cream van or birthday gifts for friends or family.
Grocery Scenario
An excellent way to teach children about budgeting is to have them plan the next grocery store outing. Let them know exactly how much money will be spent (let's say $100) at the next visit. Ask them to come up with a grocery list, by having them look in the refrigerator and pantry and figuring out what is necessary for the entire family for the next week. Instruct them to also put an approximate amount for what each item may cost. Once they have created the list, sit down and go over the list with them. When you go to the grocery store together, have your child use a calculator to keep track of how much each item costs.
Saving Scenario
Most children want the newest game systems or the best toys but very few have any idea how much those items cost. Have your child pick an item, like a game system that they have been wanting for a long time and have them keep track of how long it will take for them to accumulate enough money to actually purchase it. This will teach your children the concept of both money and saving.
Vacation Scenario
Many families go on vacation at least once a year. Come up with three feasible vacation possibilities for that year and let your child know how much money you would like to spend on a vacation. Give them a maximum budget as well as a more comfortable budget. Have your child research the three vacations online, searching for the best airfare, possible hotel choices, car rentals and different forms of entertainment. After researching and coming up with the most budget-friendly vacation, have your child present his/her findings to the entire family for a vote.
Family Budget Scenario
For some reason, many parents choose not to divulge the family budget to their children. However, what many people do not understand is that letting the children in on the family budget is the best way to teach children about financial planning. Go over the concepts of assets and liabilities and show your children approximately how much you make at your job/jobs and the total amount of all the bills. Let your children write some of the bills and show them the extra money you have leftover at the end of the month. Make them feel important by asking them what different things you could spend the extra money on each month.
