In many schools, financial literacy is not regarded as essential education. When young people move onto post-secondary school or begin their careers, they have no financial foundation to work with. When presented with rent, hydro, grocery and transportation payments, they have no idea how to balance their spending. This is the exact reason why children need to learn budgeting at an early age.
Explorer Hop has a budgeting course that helps kids learn the basics of managing their money. Our courses can help you get your child on a path to building their savings and investing in their future. For more information visit:
https://explorerhop.com/collections/personal-finance/products/personal-finance-grade-6-11
The first step to introducing children to budgeting is to make them aware that money is limited. Today, money is digital. There are banking apps and credit cards which prevent children from ever physically handling money. This makes it hard for them to understand the value of money.
It’s proven that people spend more money when all they have are credit and debit cards. When they can physically see money leaving their pocket, they will spend less. This makes it very important for parents to explain to their children that swiping a credit card does not give them access to all the money in the world. Eventually they’ll have to pay back their debt. Without knowing money’s limits, kids won’t see a point in budgeting.
Take Your Kids Shopping!
Shopping is a great way to introduce children to budgeting. Every week companies send out physical or digital deals and flyers. There are even apps such as Flipp and Honey that deliver the best deals to your phone. Explore these deals with your children and explain why they are important. For example, if their favourite cereal brand is Lucky Charms, ask them to search through newspapers or online to find out which store offers the best deal. Shopping is the perfect way for kids to understand budgeting.
Do You Really Need That?
Once you start shopping with your kids, you need to help them choose between wants and needs. If you let your kid go wild in a grocery store, chances are they’ll load up on all the sugary treats they can fit in their basket. Kids will usually buy what they want, not what they need. To make the distinction requires discipline. Even though kids feel that they need the newest video game or the latest shoes, they need to have the discipline to say no. Talk to your kids about buying only what they really need so they can save and budget for what they want in the future. Talk about wants as future goals and keep needs in the present. Encourage them to save up for a new pair of shoes and make sure they really need a new pair before they go out and shop.
Let Your Kids Plan Your Next Vacation!
This is another great way to help your kids start budgeting. The excitement of going on a vacation will keep them involved in the process of creating a budget.
Children can brainstorm different expenses and prioritize between them.
Where will the family eat?
What hotel will the family stay in?
What attractions will you see and how much will they cost?
This helps kids understand the difference between major expenses, such as hotels or plane tickets, and minor expenses, like excursion tickets. These skills help kids further prioritize wants and needs.
After vacationing, it’s a good learning experience for children to see the difference between the budget they made and how much money was actually spent. This teaches children a very important lesson about budgeting: Your expenses will never 100% match your budget.
Doing this exercise teaches kids the importance of keeping room in their budget for extra expenses like taxes and service fees, which most people forget to budget for.
Getting children working with budgets ensures that it becomes more of a habit and less of an intimidating chore. Having skills like these from a young age can ensure that they have the tools to face the real world when the time comes.
At Explorer Hop we specialize in making budgeting fun! We believe that the earlier kids enter the world of business and finance, the more success they’ll have! Our award winning Camp Millionaire program has made finance fun for thousands of kids around the world. You can sign up your child for our FREE demo session, taking place on June 26th. During these demo sessions, kids will learn leadership and investment skills that will benefit them throughout their lives. Find out more by visiting the link below: