How to Teach Kids to Budget

One of the best life skills that parents can pass along to their kids is to teach them how to budget. A budget can teach kids how to live within their means, and it can show them how to handle the money that they have. Your kids can grow into financially responsible adults with your help and guidance.

Instructions

1. Set up a system for children to earn a weekly allowance. A good system outlines specific tasks. It also outlines when and how often these tasks must be done, and it specifies the amount of money that can be earned for each task. Be sure to choose age appropriate tasks.

2. Create a chore chart to keep track of money earned. Your child needs to have a clear understanding of how much money he is earning and for what. Checking off tasks as they are completed can help your child to see how much he has accomplished.

3. Pay your child his earned amount of money.

4. Teach your child to divide his money four ways. Some to spend now. 45% to be used to spend on anything your child wants. Some to spend later. 25% towards a specific goal. Maybe your child is saving to buy a new bike.Some to save. 20% for long term savings.Some to send to others. 10% percent to go to church or charity. Feel free to choose the percentages that reflect your family values, these percentages are meant to serve as a guide and are provided for example.

5. Open a savings account with your child. This is a wonderful opportunity for your child to see his savings grow!

Tips & Warnings

• Don't tie allowances into tasks that are required of all family members. Making their own bed and keeping their rooms clean aren't optional. Instead have your chore list include cleaning the counters, loading the dishwasher and other tasks that are above and beyond taking care of oneself and one's things.

• Include bonus earning opportunities like washing the car or weeding the garden.

• Provide opportunities for your child to spend his earnings.

• Don't be irresponsible on your own time. Your child learns from your financial habits. Teach your kids how to budget by practicing good financial stewardship.