How to Teach Your Kids About Budgeting for Special Events and Purchases
Hooray to anyone willing to teach their children about budgeting for special events! Successful money managers don’t become that way overnight. It’s a skill that needs to be taught and practiced from an early age. By teaching our children while they are under the safety of our roof, we can guide them through mistakes and help them learn.
Money management principles are the same at any age. The best way to teach children is to keep things at their level of understanding and make it fun.
Start With a Goal
Talk to your child and help them determine how much they need for the special event or purchase. Do some research with them. Spending time and discussing options can be fun. Talking about different ways to achieve the same result can build a skill that will be very useful later on in their life.
Take the goal of saving for a Disney trip or for a Mickey Mouse doll. Do some research online with your child. Discuss the difference in price for the different sizes of dolls. They may decide to go with a smaller, less expensive version once they see how expensive the larger dolls are. At a minimum, this research will help your child determine how much they need to save to get what they want.
Build the Plan
You will need to teach your children that slow and steady will win the race. Take the amount of money needed and divide it by the number of allowances the child will receive over the time they’ll be saving. Tell them that is the amount of money they need to put away each time. They can keep it in a bank account, a jar, or an envelope. Just make sure they keep it separate from their spending money. One fun idea is to draw a thermometer and track the savings by coloring in the savings as it grows. Keep it on the refrigerator or the wall in your child’s room. This visual will help them see the progress and keep them motivated.
We all know that saving can become tedious. This is even true for adults, so children will need a lot of encouragement. When they start to waiver, remind them of the goal they set and help them to envision that final day when they reach the goal and have the money they want for the special event or purchase. A simple reminder that every candy bar they don’t buy will move them closer to getting what they really want can do the trick.
On the other hand, sometimes we have to allow our children to learn from their mistakes. This is the hardest thing to do as a parent. We want to rescue our children when they are hurting. But, if we teach our children at an early age, with the little things, that they have choices and will suffer the consequences of those choices, we can save them from making the big mistakes in adulthood.
Once your child has reached the goal, celebrate! Put on some music and dance around the room. Post their success on social media (if they’re comfortable with it). This is a huge deal and should be treated as such. This will also reinforce the actions they took to get to this achievement which will encourage them the next time they have a financial goal.
For more information about teaching kids, Dave Ramsey has a series of children’s books that teach money management principles. Junior learns about work, saving, spending, and giving. All are excellent books to read to or with your children.
Linda Jacob is a Certified Financial Planner® and an Accredited Financial Counselor®. Linda began working in the banking industry in high school and put herself through college. After years of growing assets for her clients, her true purpose in life became clear. She was put on earth to help everyone become successful money managers, get out of debt, and reach their financial goals. When Linda isn’t working, she enjoys cooking, golfing, and reading.