As a parent, you can teach your child how to budget by having conversations about income, spending, and saving every day. Even the most minor thing can be a positive discussion about money habits. Having a family money conversation with your children at an early age can motivate them to learn more. You can accomplish this by starting with age-appropriate discussions to boost your child's financial literacy and yours too. Here are a couple of tips on how you can get the conversation started.
One of the most significant expenses is the grocery budget as a parent. Your family can save money by planning your meals as a family. You can accomplish this by inventorying your freezer and pantry items to determine what groceries you need for the week or month.
Keep a few staples such as dry goods, beans, pasta, and canned vegetables stocked in your pantry. These are fillers in the meal and have a long shelf life. Keep a stock of proteins, frozen vegetables, and prepared oven meals in your freezer. Planning meals as a family and in advance allows you to reduce your grocery budget and teaches your children grocery shopping habits. It can also eliminate the need to stop at fast-food restaurants on the way home from work.
Helping Children Set Money-Saving Goals
Teaching your children about money, budgeting, and saving for goals can help them build a solid financial future. When my husband and I have conversations about money, we bring the children to the table to encourage them to talk about money and goal planning. Teaching your children to save funds they receive from an allowance, holidays, or birthdays for a goal they have set for themselves creates an invaluable teaching moment. Their savings goal could be to purchase a toy, a new dress, or books. When they finally make the purchase, children tend to value the item that much more.
See my feature in Conversations To Have Once Your Teen Starts Earning Money.
Helping Children Track Expenses
Once your child sets a goal, teaching them how to track their expenses is essential. Your child can track deposits, interest, and purchases using a check register, Excel spreadsheet, or budgeting app. Tracking their flow of income can help them realize how money flows and encourage them to save for short-term and long-term goals. It can also show them the result of spending their hard-earned savings and guide their future spending.
Talking with Your Children About Credit
Does your child know what happens when you swipe your credit card? They may or may not know that you have to pay for purchases after using your credit card. Teaching your child how credit works is essential when teaching them how to budget. Whether for furniture or grocery purchases, it is vital to show them that you must repay all purchases. Have a conversation with your child to show them how you repay your credit card purchases and the result of any interest you may pay for carrying a balance on your credit card. Ultimately, it can reduce any credit card debt they incur as adults.