Manage My Budget

Parents sometimes do not realize how important the effective communcation is between them and their kids. They are often too busy to teach thier own kids about money and kids do not get to learn anything from their parents.

According to recent survey, half of children population in the US have never had any conversation with their parents about managing money. This is an alarming situation as children are not being educated on simple money habits such as budgeting.

Kids need to really understand what they are doing with their money. Early education is important to avoid getting into financial trouble in their later lives. Therefore, it is important to discuss money matters with kids. Ask them questions and also answer their questions. Getting kids to involve in the parents conversation on the topic would be beneficial too as they would become more aware of family finances.

Teaching kids about money does not have to be in classroom-like environment. It can be done in more informal settings such as family dinner table. Parents and kids can openly discuss their issues with money and parents can definitely take take advantage of this opportunity to lecture their kids a few money principles. Keep it fun and interesting and the kids will respond to your teaching.

Encourage kids to talk to you about any money concerns they may have. Setting a set time to talk about money issues will keep everyone a little more serious about it. For younger children, parents can talk to them about the differences between cash, credit cards, cheques and loans – the basics. For teenagers, the discussion should be on more complex topics such as economics, inflation, exchange rates, jobs, mutual funds, stocks, bonds, term deposits or anything that is of particular interest to them.

Experts suggest that five fundamentals of financial fitness if learned before age 30, can lead to a financially sound lifetime. They are: saving 10 percent of earnings, taking advantage of retirement plan through your job, working towards owning a house, having enough liquidity to deal with an emergency and importantly avoiding debt. Budgeting and saving habits will determine the children’s future financial health and communication between the parents and children is no doubt very important to help foster these fundamentals.

Parents should note that every child is different. Just because your neighbour’s kids love calculators, do not expect your kids for the same. As parents, it is assumed that they know their kids best. Parents should recognise the children’s personality, strengths & weakness and personal traits and best means of communication with them when it comes to money. Do not give them pressure by saying what other kids are doing well. Some kids may like counting money on calculator. Some kids may like more visuals. Some kids may prefer do it on computer. Maybe kids may not like numbers at all. It is important to recognise kids’ personalities and try to educate them in the most effective way about money.

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Parents want the best for their children without a doubt. In the GFC (Global Financial Crisis), this has been even more prominent for families and you want to ensure your family has enough money. The question is, how do you as parents make sure your children – who will probably face the same problems that we all experience now – come out on top?

You can increase the potential of your kids financial future when they reach certain crisis.

Now how do you do that? Your best tool of initially educating them is by giving them an allowance!

Payments to your child every week so they can buy little things such as toys or candy in the most simplest terms is called an allowance.

Why is an allowance for children important? The reason for this is so we can teach them about budgeting, saving and the cost of money. Budgeting is a big reason why we give an allowance for kids. If your child decides to use all their allowance on entertainment, let them do it. After they have spent all their money, educate them how they could better utiliste their allowance to bring a bigger reward later. This could be buying the latest video game or basketball that costs more.

Allowance for kids educates them how to save and plan ahead which will be more beneficial to them later on. They could start looking to buy a car, or even a house one day.

One basic concept and principle I stand by is to never take away your child’s allowance if they have not behaved well. Let me explain to you.

When we give an allowance to our children, what we want to do is model to them what happens in real-life. Usually we get paid weekly (or fortnightly or monthly). So we get a consistent payment. We may have some bad weeks where we might not perform too well or get complaints from clients.

Kids are going to be bad and throw tantrums, but don’t use this reason to suspend their allowance. Use other methods to teach them a leason instead.

Allowances for kids is used so they know how to budget properly, so they can start to save and plan ahead for a holiday that may take 12 weeks to save up for. Let them do this so they can experience what it is like to budget for something bigger.

This tool of being able to budget and save that you instil in your children will be a valuable tool right through to their adult years.

At the end of the day, don’t be too strict on your children with allowances, make it fun, and always encourage them with what they can do with savings in the future.

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