Because of the downturn in the economy, there are news reports of many people going to banks and credit unions seeking loans to help them get through the rough patches and meet their financial obligations. Some of those people have already defaulted on loan obligations and yet are trying to refinance their debts. I think it is critical to teach our children about budgeting and not overspending from an early age so that those habits are engrained into adulthood.
There is an excellent online article written by Anna Baluch titled Budgeting for Kids: How to Teach It and Why It Matters. The article stresses the importance of teaching budgeting skills so that children understand the importance of saving for long-term goals and developing good habits for financial solvency from a young age.
It is generally understood that our first mentors for handling money are our parents so why not teach our children this important skill? When should parents start? The article recommends as early as 8 years old, or even younger, at age 5, if it is just teaching about saving.
The article lists key takeaways as follows:
• Parents can learn ways to start discussing the subject.
• Budgeting teaches critical savings and spending skills that children can use to achieve financial health in adulthood.
• It helps children learn how to identify financial goals and develop a specific plan for achieving them.
• You can use real-life examples to teach children about budgeting so they can relate to the lessons.
The article recommends having a simple budget sheet that is a sheet of paper with 3 columns – goals, savings, and cost. Discuss it with your children and then keep them on track.