Have you ever wondered what might happen if your kids had a firm grip on their finances from an early age? With a solid understanding of finances from an early age, kids are more likely to succeed when they grow older.
Math training for kids is an excellent first step to teaching your children all about money and how it works. In this blog, we’ll explore efficient strategies for teaching kids and budgeting and why it matters at all.
Why should you teach your kids about budgeting?
According to an analysis by the Pew Research Center, only about 24% of young adults could be considered financially independent by the age of 22. This number could be significantly increased if more kids learn about budgeting and making excellent financial decisions from a young age.
Studies have shown that the financial knowledge and principles children retain as they transition into adulthood are derived primarily from their parents. So, if you teach them how to budget and avoid debt and overspending, they’ll most likely carry this knowledge into adulthood and be more successful.
Take some time to think of your own money habits we’ve financial knowledge. Are there any nuggets you picked up from your parents?
How to teach your kids about budgeting
In addition to leveraging math classes for kids, there are tons of steps to take to ensure that your child fully understands how and why they need to budget such as:
Explain the difference between wants vs needs
More often than not, people end up overspending because they don’t quite understand the difference between wants and needs. Help your child understand that wants are less important than needs.
For instance, they may WANT a new toy whereas they NEED a new pair of shoes. In cases like this, the needs should rank higher on the scale of preference.
Create a budget template
To help your kids understand how budgeting works, you can create a template for them. Have them add up their monthly income (any allowance they get each month), write down their expenses, and subtract their expenses from the income.
If their income is enough to cover their expenses with a little extra, that’s great. However, if it isn’t, you’ll need to work with them to get rid of unnecessary expenses.
Help them set goals
A great way to learn about budgeting is by putting it into action. Encourage your child to identify a goal that costs money such as a new toy or game. Next, create a log book where they record any money they earn.
Encourage them to physically deposit their money in the piggy bank and then monitor how close they are to reaching their goal. This will certainly teach them a lot about budgeting.
Teaching kids budgeting principles is more important than most people think. When you teach your child how to budget and make great financial decisions, you’ll be setting them up for success. This way, they’d grow into financially responsible adults.