Top 5 tips to teach your kid about home budgeting
A huge percentage of financial articles talk about savings and investments for millennials, mid 40’s adults, and so on. There is a small percentage that touches on financial topics for your kids. Therefore, we need to change the narrative and incorporate the kids into the system.
Furthermore, if we want them to be responsible and accountable financially, it needs to start early. According to a recent study at the age of 3, your kid can understand the basic concepts about cash.
Whereas when they attain age 7, their money habits have already developed. That means you need to be on top of your game when teaching your child about finances. That said, we’ll discuss top 5 creative ways to teach your child budgeting tips. Let’s jump right in., shall we!
What is budgeting?
Before we get to the tips, it’s vital to understand what budgeting is all about. Well, it refers to creating a plan on how your child can spend money. The plan is usually drafted to cover a certain time. Additionally, the plan can be re-evaluated after a certain time to see if it is effective or not. And if it’s not effective, a new plan is drawn to meet the need. The objective is to teach your child the importance of saving rather than spending.
So, here are the best tips for those who want to teach children how to budget
1. Make use of a piggy bank
Piggy banks are highly recommended when it comes to teaching your child how to save. It is easier for a child to lose interest in the saving culture if they are not motivated. That means opening an account for them is off the table. That is because they do not see an account, but they can see the piggy bank. Therefore, visualizing their piggy banks makes it easier for them to accept the idea.
On the other hand, you can stick a picture of the intended target on the piggy bank. If the child is saving towards buying a video game player, bike etc.; you can stick a picture of it on the piggy. This keeps them motivated, and they would be willing to save more towards the goal.
2. Have multiple money jars
Budgeting is all about allocation, hence make use of multiple jars. That means there is a jar for spending, savings, emergency fund, long-term savings and so on. Having all the jars labeled makes it easier for them to learn about allocation of funds at a young age. Hence they will be responsible and accountable as they grow.
3. Match your child’s saving
We usually respond positively to rewards. That’s why you work hard to earn a bonus or a promotion. The same case applies when teaching your kid about the saving culture. Therefore, much your child’s savings. That, in turn, motivates them to save more.
Hence once the duration has elapsed, remove the money from the jar(s) or piggy bank and count. If the total amounts to PHP 100,000, double the amount.
4. Play Monopoly
Monopoly is a board game for two or more players. Though, the maximum number of players in the game is eight. Additionally, the game entails players moving around the board, selling and buying buildings or land. The main aim is becoming the richest and win the tournament.
For this reason, we recommend the game to teach your kids, its expose them to real investments at an early age. At this point, they can grasp the concepts about investments, when to purchase a property, hold cash, or even let go of their investments. Once grown they will also understand the concept behind managing huge amounts of cash, and paying taxes.
5. Tracking the expenditure
Keeping track of your child’s savings is vital since it teaches one how to be accountable. For this reason, have a written record of their savings and spending. Also, you could opt for the budgeting apps, which are more fun for the kids. By having the records well balanced, the child can control their spending culture and save more.
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In the Philippines, a huge percentage of Filipinos are business owners, contributing heavily to the country’s economy. However, Filipinos are known for having poor saving habits, which has affected generations. This is why we suggest teaching your kid ways on how to budget. This, in turn, prepares them for the future and can take care of their investments and save with minimal effort.
However, you can’t teach your child how to save if you lack income. Hence you can request a personal loan from Union bank.
The funds are offered at a low interest rate. You can then use the cash upon approval an allowance and show them how to save. Remember, the cash should be given at intervals and not at once. This, in turn, cultivates the saving culture in them.