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June 24, 2024 / Danielle Ritter
Teaching children how to budget

Teaching children how to budget

Teaching children how to budget money sets the foundation for their financial well-being in the future. Just as we teach them to read and write, educating them about money management from a young age empowers them to make informed financial decisions as adults.

Teaching children about budgeting requires introducing them to the concept of money. Starting with simple explanations about what money is, its value, and how it’s earned can lay the groundwork for understanding budgeting later. Practical examples, such as giving them pocket money or involving them in household chores for an allowance, help children grasp the connection between work and earning money.

Once children understand the basics of money, introducing the concept of budgeting is the next step. A budget is essentially a plan for how to spend and save money wisely. It’s important to explain to children that a budget involves making choices because resources are limited. Encourage them to set goals for their money, whether it’s saving for a toy, a trip, or donating to a cause they care about. This helps them understand the value of prioritizing spending and delaying gratification.

To make budgeting tangible for children, consider using visual aids such as jars or piggy banks labeled with different categories like “spending,” “saving,” and “sharing.” Allocate a portion of their allowance or earnings to each category, allowing them to see the importance of setting aside funds for different purposes.Graphic of a family sitting on a couch with a giant calculator, coins and dollar bills floating around them.

Beyond just the practical aspects, teaching children how to budget fosters important life skills such as critical thinking, decision-making, and self-discipline. Ask them questions like, “Do you really need this toy, or would you rather save for something bigger?” This helps develop their ability to evaluate tradeoffs and make informed decisions about their money.

Budgeting instills a sense of responsibility and independence in children. By giving them control over their own money within a budgeting framework, they learn to take ownership of their financial decisions and consequences. Mistakes might happen, but they provide valuable learning opportunities. Encourage them to reflect on their spending habits and adjust their budget accordingly, fostering a mindset of continuous improvement and adaptability.

Teaching children how to budget also opens important conversations about values and priorities. Use budgeting as a platform to discuss topics like the difference between needs and wants, the importance of giving back to the community, and the value of saving for the future. These discussions help shape their attitudes toward money and instill values that will guide their financial decisions throughout their lives.

This article was drafted with the aid of AI. Additional content, edits for accuracy, and industry expertise by Danielle Ritter, manager of F&M Trust’s Norland Avenue Community Office.

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