How to Teach Kids About Budgeting and Why It Matters?

Teach Kids About Budgeting

We teach our children addition, multiplication and division so that they tend to combat real world challenges and apply them for critical thinking. But have we ever thought of teaching them the application itself? Or why is finance such an underrated topic in common households, submitted to be viewed only patriarchally? However, we should understand that teaching kids about finance and budget will open a wide sheet in front of them from the beginning to establish their financial disciplines and goals. It will cater to them to prioritize their resource management, avoid debts and be independent thinkers.

But Does It Even Matter If Our Kids Do Not Know About Budgeting?

We should understand why budgeting knowledge works great for kids and makes them a better individual.

  • Decision making skills- Budgeting will make the kids aware of the difference between wants, needs and savings. This further will enable them to enact their financial choices whether to spend or save their money and also empower them to be independent thinkers, rather than being dependent on others.
  • Importance of money- In today’s world, where teens misuse their parents’ money to indulge in illegal activities, budgeting will strictly instill a sense of responsibility and value for a single penny amongst kids. Budgeting involves proper strategic plans involving money management, which is a crucial topic to learn as futures of the nation. This act will make kids understand the volatility of money.
  • Goals and Null debts- Budgeting will make the kids more self-aware about their dreams and will draw a line between necessity and unnecessary things. In order to get their favorite pair of crocs or a scoop of ice cream via their limited money source, the sense of achievement of their goal will be incorporated within them in the long run. They will realize the importance of aims and also understand that it is essential to stay within their own financial limits.

How Do We Teach Our Kids About Finance and Budgeting?

  • Firstly, you should introduce real money and basic financial terms or concepts sooner when they understand the essence of money for buying their things.
  • Secondly, as they understand further, offer them a small amount of allowance and encourage them to handle their expenses within that limited amount themselves. You can also keep them set saving, giving or spending targets.
  • Thirdly and very importantly, teach them delayed gratification that sometimes they might not receive what they want via stubbornness or illicit means. They should take this positively and work on their own pace patiently to achieve what they want.
  • Fourth, start involving your child in your minor financial discussions and even ask them for their views. You can appreciate or correct them as per your thinking.
  • Fifth, Child imitate what their elders do as they are their sole role models. Try to be strict and  precise in your personal monetary matters to make them bold investors.
  • Sixth, encourage creative entrepreneurship in your child and review their way of handling their expenses.

Concluding this article, Budgeting is the best way to ensure a bright financial future for your child and is rather an investment of efforts to enable them to be great citizens of this country. By this small step, we not only teach them to be financially disciplined but also be wise and bold.