Should You Involve Your Kids in Budgeting and Saving Money?
Most parents want their kids to stay out of anything involving money. Some go as far as suffering in secret when their finances are in disarray. They’d work overtime or three jobs to sustain the family’s needs. The kids, meanwhile, would think that is what normal adulthood looks like.
But are we raising financially-savvy kids this way? If saving money is a crucial life skill, why do we keep kids in the dark when it comes to budgeting?
Perhaps it’s time to unlearn the outdated values we were raised with. While we don’t have to involve our kids every step of the way, they should at least learn the basics of saving money. And when they become teens, they can start learning about investing.
We can begin by saving money as a family. But is this workable?
Letting the Kids in on the Budgeting
One easy way to let the kids in on the budgeting is by talking about food costs. Since every family member consumes it, the kids should understand the impact of their meals on the family’s budget.
Take your kids grocery shopping. But don’t let them take whatever they want off the shelves. Instead, arrive with a list and let your kids pick up the items listed down. To save even more money, plan your meals so that every item on the list has a purpose.
You can also tell the kids how much money you’ve brought. That way, they can check the prices of each item before depositing it into the cart.
If your kid asks to buy something that isn’t on the list, don’t say no right away. Consider first if that item is a want or a need. For example, if your kid asks to buy art supplies, it might be because they need them for school. The supplies may make a mess at home but are useful for your kid’s learning.
While you choose products to buy, discuss differentiating between wants and needs. That’s another one of the easiest ways to teach kids about budgeting. Explain that needs refer to the basics, such as food, shelter, clothing, healthcare, and education. On the other hand, wants are unnecessary pleasures, like amusement park tickets, the movies, or the latest electronics.
Try quizzing your kids about wants vs. needs as you make your way back home. Point out things you see around and ask them to identify if it’s a want or a need. You can continue it at home by pointing at some household items. This little quiz will quickly allow your kids to understand what should be prioritized when spending money.
Spending on Special Occasions
The kids may request a grand celebration or gift during birthdays and other special occasions. If you’re aiming to be a frugal family, this can be tricky to deal with.
You can make an exception during birthdays. But it doesn’t mean you have to overspend either. Set an appropriate budget still, and let your kid know about it. Besides, you can have a fun party without breaking the bank. Your kid can have their friends over, for instance, and eat home-cooked meals and a cake from the grocery store.
Graduation parties, Christmas, and Easter celebrations can be fun but low-cost, too. Stick to tried-and-true inexpensive meals. Skip the party rental services and create the decorations yourselves.
If you want your kids to have a bigger celebration that leans more on the pricey side, you both can compromise. For example, let them earn their own money. That way, their big celebration won’t go over your family’s budget, and your kid would learn how to spend their own hard-earned money. They’ll also learn the value of their work and how important it is to save.
Getting Started on Investments
If your kid is old enough for part-time work, they’re also old enough to learn about investing. Talking about investments as a family is the ultimate way to grow wealth as a single unit.
You don’t have to create a joint investment account, although it’s an option. If they’re below 18 years old, you should open a custodial account under their name and be able to oversee their investments.
Consider a short-term investment with generous returns, like short term low risk investment options. They may be for moderate risk-takers but still appropriate for beginners. Their high liquidity offers superb security.
While their money grows in their investment accounts, allow them to set goals for their earnings. You can also set family goals, like traveling or buying a new property. If you’re all business-savvy, you can also start a family business.
Saving money as a family is highly workable, but it requires clear and concise communication. If your family is comfortable talking about goals and money, you will pull this off impeccably.