Teaching Kids How to Budget and SaveKristen Howerton
My own family of origin has a less than stellar track-record when it comes to budgeting. My dad was somewhat of a miser: he really didn’t like to spend money but that often manifested in ways that were frustrating for both myself and my mom growing up. On the other and, my mom was an ardent shopper, and I have many memories of her putting things on layaway and shopping for things that she clearly could not afford. When I was a teenager, my father discovered that my mother was in serious debt, something that she had hidden from him. So as an adult, I have had to navigate budgeting for myself without an ideal model from my parents. I find that I struggle with both overspending and over-saving. I would really love to give my kids the gift of learning how to budget and save at an early age.
Here are some of the techniques we are using to try to help our kids understand the concept of money and saving:
1. We started a savings account for college.
All of my children know that we have a savings account for them for their college years. While I don’t think they truly understand the magnitude of saving for college, they do understand that at many birthdays and holidays, there relatives are contributing to this account. I think that being open about this will help them appreciate both of the practice of saving, and the gift of saving money for others. I’m also hoping that they will be grateful when they are ready to go to college, and don’t have to scramble to pay for their education.
2. We have them keep a piggy bank.
It’s cliché, but it’s also effective. Each of my kids have a piggy bank where they can save loose change and money that is given to them. Every so often, we will take the piggy bank to a place that counts change, and I will give them the money and dollar bills and let them choose it however they would like. There are certain things that we don’t provide for the kids, that we reserve as a special occasion for money they have saved. In our family, this involves trips to Starbucks, sodas, and certain types of toys. Because we reserve certain treats for saved money, they are very motivated to save.
3. We are open about our own budgeting.
I don’t ever want my kids to be worried about adult financial issues, but at the same time I am open with them about the fact that we are budgeting as well. I let them know when there are certain items of privilege that we are choosing not to buy because we don’t have the money for them. I don’t want them to believe that money or our bank accounts are limitless wells. We talk about budgeting in front of them, and allow them to hear about our decision-making process when we are saving money for things like vacations or other extras.
4. We require them to earn their toys and other privileges.
Are kids are growing up any materialistic society, and it can be a struggle when they hear about new toys from friends, or just from watching TV. In our house we’ve instituted a role for new toys, and they are earned through good behavior. This way, I’m not constantly fending off questions about “Can I have this, can I have that?” In our house, the answer is, “You can earn it”.
5. We model giving generously.
We really tried to impart to our kids that a part of our income is spent on charity. Each of our children sponsors a child in a Third World country, and they are very involved in the process. We also have a rule that for any new item but into the home, we donate an item. This serves to keep us from acquiring too much, but it also gets the kids engaged in the idea of donating our things, even when they are things that we still enjoy. We also encourage our kids to take a portion of their piggy banks savings and choose a charitable cause to make a donation.
I would love to hear ideas from other parents, especially since my kids are relatively young. How are you helping to teach your kids about budgeting? How are you helping to teach them about saving, and about giving as well?