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For those of you who have kids, have you gotten them started with personal budgets? I imagine you have to wait until they really have some income to start teaching them about personal finance...so do you wait until they are in high school and have their first job or do you start earlier once they begin receiving an allowance? I'm just wondering at what age can you start teaching this incredibly important skill to your child.
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I think it is an ongoing thing, from setting an example that you can't have everything when they are little, then progessing to why you can't and onto how you can save for the important stuff. -
Start ASAP..even if it is a fake budget for fake money, or a little info on your grown up budget, or a short idea of what money you set aside for their needs.
For my kids we also discuss how their gift money is used. All money gets some set aside for charity, some for saving. (you can get into percent after they can count.)
The sooner the better IMOComment
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We start our kids when they turn 5. Allowance to manage money. When they are 13-ish, they can make their own money. But, they can learn about money management before they have real money to manage, and I think it is good to learn as soon as possible. Checking accounts/babysitting type jobs at 13. 16 = real jobs and credit cards. That's just how dh and I were both raised, and worked well for us. I don't think it is really ever too young to learn about all this money stuff.
I'd tell you my 5yo probably hasn't a clue (we just started his allowance a month ago), but my 7yo has better money management skills than most adults I know. Maybe more in savings, too?Comment
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We started having DKs take responsibility for their allowances around 10 y/o. They had to decide between spending choices and much of their money was earned doing chores. They always helped by doing the math as I balanced the chequebook since it was a practical exercise and helped them understand that money needed to 'work,' not be squandered.Comment
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We started betwwen 8-10 y/o, with increasing resposibilities as the amount went up. As soon as they got drivers licenses we gave each child a credit card and specified how they could use it. This meant we got the bills and had several years to oversee usage. At about the same time we also increased their allowances to include a monthly amount for clothing.
I know a person who has a kid entering high school this week. She has never taught kid anything about $$. He just comes to her daily for whatever he needs. IMHO, VERY bad idea.
My kids went to college in the get a t-shirt for signing up for a cc era. They BOTH finished college w/NO cc debt unlike 90% of their friends.Comment
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My opinion is as soon as they receive an allowance or commission for working. 10% for savings, 10% tithe and the rest for spending. This is just a start.Comment
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I agree as soon as possible! We use allowances to build their money skills. i have heard that some people are concerned that that will make them feel that they should get paid for anything they do to help. We don't give an allowance based on chores, we base it on age. They also get chores to do which increase with age. In order to lose their allowance they would have to not act their age. That isn't just chores, that is behavior, "school" work, attitude and responsibility (chores fit in here). So I don't expect them to want paid for helping. We budget their money from the beginning (age 5 ). 25% to savings, 25% to charity and 50% to spend. When they reach 13 they must earn their own money. I will be willing to pay them for shoveling snow (since I pay someone now) but not other chores they normally would be asked to do.
My 7 year old is very generous and is learning how to save. I also loan them money when they want and we budget how to pay it back. When they are 13 I will start charging interest as well.Comment
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As soon as they start getting interested in money. The earlier they realise the value and that it is a finite resource your have to use wisely the better I think.Comment
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I would say that's a pretty tricky question. But I am assuming most people start teaching their kids the value of money in college. But of course I support the theory that the teaching should start fairly early. Anyways found a few tips in case anyone wants to teach their college going kid how to budget
1. Work with your kid and make a list of his/her regular expenses.
2. Include sources of income like scholarships, allowances, loans, part time wages etc.
3. Minus the expenses from income to check if the budget seems ok.
4. If the expenses outweigh the income, trim expenses until the numbers agree.
5. Your kid's college budget should include provisions for savings.
Encourage your kids to make deposits into a savings account for future purchases
Also review the budget periodically with your kid and impress upon them the power and importance of savings. Make a few provisions for exceptions to the budget occasionally but of course don't allow it to be the rule. Happy budgetingComment
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I attended a lecture about teaching your kids how to manage money, and the speaker's advice was to start an allowance as soon as the child is old enough to say, "I want..." in the store. We're starting when my son turns 5.
The advice was to pay the allowance in coins, and to have 4 jars, labelled "Charity", "Mad Money", "Short-Term Savings", and "Long-Term Savings". Each week you put 10% of the allowance into "Charity", and 30% into each of the other jars.
The lecture was based on a book called "Money Doesn't Grow on Trees" and there is a sequal for teenagers called "Money Still Doesn't Grow on Trees". I think the sequal covers budgeting.Comment
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Interesting that this has come up again as I was just part of a discussion on it over the weekend. DD1 had some friends & family to dinner on Sat inc a woman & her son the same ages as DGD. Both just started school.
Friend said she plans on $1/week. DD1 said she was 'thinking' about 0.10/day. I suggested she go w/$1/week and insist 30% be saved. Now, after further review I am going to suggest 0.20 saved & 0.10 for charity.Comment
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Agreed
I agree 100%Originally posted by littleroc02us View Post
I own a cashflow software and my daughter has just turned two.
Teaching these skills is the fundamental element of wealth.
It may be hard, but that is our role as parents.
Even if we did not do it (and have not started) we can say to our kids, this is because i made the mistake and you don't have to.
Cheers
WaltComment
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Personally, I had no clue how to budget until I had to completely pay the bills. And I still don't know.
I would suggest when they first get a job - it is hard for them to care about the money they get until they see some VALUE attached - like their own time. You have to cut them off with your money, though, or they likely still won't pay enough attention.
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