The best time to teach your children about building a long lasting wealth is when they are young. And the starting point is having a working budget. Many adults would be in a much better financial position today if their parents had encouraged them to start budgeting from an early age. So, if this is something that interests you, read on. This article will show you how to teach your children about budgeting.
1. Model Great Financial Skills Before Them
One of the best things you can do for your child is to model great financial skills before them. Let them see you being thoughtful and intentional about your purchases. Model them the importance of delayed gratification. Let them see you waiting to make a purchase until you can afford it or being wise with your money so you have more to give generously.
If you don’t have a budget that your family follows, now is the best time to do so. Don’t expect something of your teen that you aren’t also doing yourself! You can get them to read The Richest Man in Babylon book and discuss the lessons together and how to apply them.
2. Talk About Finances Openly
Many parents aren’t very upfront about their finances with their children. Irrespective of our take on this, this does a disservice to your children. You don’t have to share all the details about how much you make and spend, but it will be helpful to bring your children into financial discussions you have with your spouse. Engage them when you setup your budget and show them what is working for you. Sometimes, you can also take them with you when you go to the bank. Whenever you make a financial decision, explain the reason to them behind your decision.
READ ALSO: HOW TO TEACH YOUR CHILDREN ABOUT CREDIT
3. Set Up a Budget Together
Once your child starts earning some income, work with them to set up a budget from the time they start earning money. You can use a basic budgeting spreadsheet or an app. Decide on what works for you and show them how to use it. Have a conversation with them and make a plan of what percentage of their income they want to save, give, and spend. Then, go ahead to break them down even further by mapping out what their expenses are each month. Once you have this in place, then it should be pretty simple for them to divvy up their paycheck into the proper budget categories.
4. Be Their Accountability Partner
As your children begin this journey, they will probably need lots of help from you. So, try to hold their hand at first but ultimately have them be responsible for setting things up and actually doing the work of inputting what they make and spend. Your goal as a parent is to to raise responsible adults not co-dependent children. So, avoid micro-managing them. Instead, provide oversight and accountability for them to develop the habit of budgeting.
READ ALSO: HOW TO CREATE A PERSONAL BUDGET
5. Give Room For Mistakes
While it is okay to protect your children from getting hurt or making mistakes, you need to let them be in charge. So, allow them make the mistakes now while they are still young. This will hopefully prevent much larger mistakes when they are older.
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