With a huge number of Americans still trying to bounce back from the recession, it is more important than ever for parents to teach budgeting, and encourage their children to put it into practice. If this task seems more than a little overwhelming to you, you’re not alone. Why do you think so many parents have welcomed home “boomerang children”–college graduates returning to the nest to let Mom and Dad foot the bills?
Teaching your child to budget doesn’t have to be daunting if you break it down into small steps. That’s why I wanted to share a few simple ideas about how to raise budget-conscious teens. I hope these five steps will help you and your child begin a dialogue and give him or her some practice handling money on his or her own. This post is one of two on this topic. Today, I just want you to think about:
Show and Tell.
Your budget, that is. There may be no better way to help your child understand budgeting than by involving him or her in managing your own. Your child needs to be aware that you make decisions about money many times every day, and how those decisions effect today, tomorrow, and longer term.
Preparing the Way
In this particular case, I am not recommending you sit your child down and go over spreadsheets about the budget. I think you will find it more comfortable and find your child more receptive if you discuss the topic more casually (most students don’t get too excited about sitting down with their parents to discuss finances). Instead, try to integrate the message you are trying to convey into everyday life. Read on, and I’ll give you an idea of how to get started.
Putting it into Practice
You’ve decided to let your child in on how family financial decisions are made–but where do you begin? Whether your household budget is barely under control or a well-oiled machine, it probably has too many components for your student to grasp all at once. Begin with baby steps.
- Let your child see you paying bills, and ask if he or she knows much about it. You can talk about how you manage and track each expenditure, pay each bill (online, automatic payments, writing checks, etc.) and how often (weekly, monthly, etc.). Don’t forget to let your child know what happens if you’re late on a payment.
- Use once-a-year bills, such as your car registration, as a starting point for talking about irregular expenses with your child. He or she may have seen you paying bills on a monthly basis, but now you can talk about how you fit those yearly or unexpected payments — tax payments, surprise medical bills or scheduled car maintenance– in with the monthly ones.
- Send your child grocery shopping. Give him or her a grocery list and set amount to spend (cash will make this easier than handing over a credit card) and have him or her try to stay within the budget.
- Explain what is and isn’t in your budget. For example, if your child wants to go out for dinner but you’ve spent your dining-out funds for the month, simply say so. Along this same vein, when you take a weekend trip you might explain that you saved a certain amount each month in order to cover the costs of the vacation, and that this amount was included in your monthly budget, too.
There are a myriad ways to let your child become more aware of and involved with your family’s spending plan, so watch for them to present themselves in your everyday life. You don’t need to set up a curriculum, just take advantage of the teaching moments as they appear.
Once your child heads off to college and begins to manage their daily affairs, he or she will likely appreciate the tips and education you provided ahead of time on how to manage a budget. (My son actually made a special phone call to me from college in his freshman year thanking me for making sure he knew how to manage his money and time, do his laundry and cook as he watched some of his friends struggle with these tasks. To me, that day was one of the most satisfying compliments I have received about being a mom!)
All the best,