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NURTURING FINANCIAL WISDOM: TEACHING BUDGETING BASICS TO CHILDREN

Updated: Jan 31


In our last post, The Unsettling Reality of Dying Without a Will, I hope you took an action to be sure you have one in place. It’s also a good time to check to be sure your beneficiaries are all up to date. Check with your bank or credit union. Check to be sure your beneficiaries for your retirement and Health Savings Accounts are current. Now is also a good time to organize all of your important papers and have them in a Legacy Drawer just to be a good steward to your family. 


This week is an equally important topic. What many studies have shown and I personally see when working with clients is that money is not actually a math problem. It’s a behavior problem. The problem is 80% behavior and 20% is based on the numbers. Children aren’t taught basic money principles in school. So where do our children learn? Social media, their friends or at home. The problem in the home is that most parents just handle it and never really involve their kids in money discussions or show them how the bills are paid or explain how budgeting works. According to this Forbes article, nearly 70% of Gen Z’s said their financial situation was not looking good. It’s not a math problem. It’s a behavior problem.


In a world driven by consumerism and complex financial systems, instilling budgeting basics in children is an invaluable gift that will serve them throughout their lives. As parents, educators, and mentors, it's our responsibility to equip the younger generation with the skills needed to navigate the financial landscape. In this blog post, we'll explore the importance of teaching budgeting to children and offer practical tips to make financial education a seamless part of their upbringing.


Why Teach Budgeting Basics to Children?

Establishing Financial Literacy Early:

Introducing budgeting at a young age helps children develop financial literacy. Understanding the concepts of income, expenses, saving, and spending lays the groundwork for responsible money management in the future.

Building Responsible Habits:

By teaching children to budget, we instill a sense of responsibility. They learn to prioritize needs over wants, make informed spending decisions, and develop a habit of planning ahead. These skills are crucial for building a solid foundation for financial independence.

Fostering Critical Thinking:

Budgeting involves making choices and evaluating priorities. Teaching children to budget encourages critical thinking as they weigh the consequences of their financial decisions. This skill extends beyond personal finance and can be applied to various aspects of their lives.


Practical Tips for Teaching Budgeting to Children:

Make it Fun and Interactive:

Turn budgeting into a game or a family activity. Use play money, create a simple budgeting board game, or involve children in real-life budgeting decisions. Making the process enjoyable ensures that children stay engaged and view budgeting as a positive skill.

Set an Allowance:

Providing children with a modest allowance is an excellent way to teach budgeting. Encourage them to divide their allowance into categories such as saving, spending, and sharing (for charity or gifts). This hands-on experience helps children understand the value of budgeting and managing limited resources.

Create a Visual Budget:

Use charts or visuals to represent income, expenses, and savings. A visual representation makes it easier for children to grasp abstract financial concepts. You can use colorful charts or even create a simple budgeting app tailored for kids to track their money.

Teach Delayed Gratification:

Help children understand the concept of delayed gratification. If they want to buy a toy or a game, encourage them to save for it rather than making an impulse purchase. This not only reinforces budgeting skills but also teaches patience and goal-setting.

Set Financial Goals:

Introduce the idea of setting financial goals and write them down. Whether it's saving for a special toy or contributing to a college fund, having clear objectives helps children understand the purpose of budgeting. Celebrate small victories together as they reach their financial milestones.

Lead by Example:

Children learn by observing. Demonstrate responsible financial behavior by discussing your own budgeting decisions and involving them in family financial discussions. When they see budgeting as a normal and positive aspect of daily life, they are more likely to adopt these habits themselves.

Teaching budgeting basics to children is an investment in their future financial well-being. By providing them with the tools to navigate the financial world responsibly, we empower them to make informed decisions and cultivate a healthy relationship with money. As parents and educators, let's commit to nurturing financial wisdom in the next generation, ensuring they are well-equipped to face the challenges and opportunities that come their way. For more ways to help your kids understand money, check out 15 Ways to Teach Kids About Money.


If you have questions or would like to understand more about what a financial coach can do, schedule a no-obligation 10 Minute chat with me. I’d love to hear from you. Until next time…


Become A Better Steward,

Greg Carroll

Legacy Financial Coaching


 

Whether you are financially frustrated or have big money goals, I help you take control of your money so you can live debt-free, build wealth and better steward your resources to create a lasting legacy. Find out what its' like to Work With Me.

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