My original title for this post was “How Budgeting Changes Kids’ Behavior” – but I had to re-think that, because it changes parents’ behavior, too.
This isn’t just the budgeting that we do in our adult lives (or lack thereof) but the conscious effort that we put forth in helping them to budget. In short, when we help our kids understand their budget, we’re tackling one of our biggest budget items at the same time!
Budgeting gets a really bad rap, kind of like dieting. But we all spend money, and we all eat food. Budgeting and dieting are those same simple actions, but planned out in advance. Without a plan, you’ll stop eating when the refrigerator is empty. Without a plan, you’ll stop spending when you run out of money. (Maybe.)
Budgeting is just a smarter way to spend money – by deciding ahead of time where it’s going to go. Don’t get me wrong, it’s not easy to do. It’s also not fun, at least at first. But it gets better. Once you have a plan for your money, there’s a lot of peace in knowing that you’ll be able to get through to the end of the month, and you’ve got a plan for next month, and the month after that… I’ve had to live week-to-week and month-to-month; it was not fun.
So the basic steps in building a budget for your kids:
- Track how much money you’re spending on your kids each month, or in a year. If you don’t have good records, keep track of the little stuff for a few months, then try to estimate the cost of other activities the rest of the year.
- Add everything up, add in some for savings and charity, then divide by 12
- You now have a monthly budget for your kids!
For our family, the kids budget was one of the larger variable portions of our family budget. We would spend about the same amount each month on gas, food, mortgage, utilities, and so on – but kids clothes and activities would throw a wrench in our monthly plans. As soon as we figured out what they cost us on a monthly basis, we were able to start smoothing out our budget – which helped us to get out of debt, and to lay the plans for our six-week sabbatical last year. Helping our kids to build there budget also helped us out in the larger family budget.
The final step, after building up a budget for the kids, is to work with them so they can build the skills to manage that budget themselves. Our kids started at age 7 or so managing $5.00 per month for “fun” and $20.00 per month for shoes. Every year, we added more categories to their budgets, and now as early teens they’re managing $150.00 per month (plus whatever they earn outside the house) and we no longer worry about paying for sports, or clothes, or school lunches, or… well, much of anything. Because they have planned out their spending, we no longer have to worry about it. We just put the same $150.00 per month into their account, and they take care of the rest.
The best part? We no longer hear, “Dad, I need money for…” requests. Instead, we hear, “Dad, I need to pay for a uniform next month. Can you help me figure out how to fit that into my budget?”
I wish I had learned that when I was 14.