If you and your spouse decide that it’s time for your family to be a little more frugal, it’s a good idea to get the kids onboard. After all, it’s difficult to reach your savings goals when you’re constantly trying to explain to your kids why you can’t afford to go to the movies each week, or you don’t have extra cash you can spend on a gift for them.
Sitting down with your kids and teaching them about things like managing money will make it easier to reach your financial goals. At the same time, it’s always a good idea to provide your kids with budgeting advice that they can use later in life.
Here are a few tips to get you started.
1. Help them Visualize their Goals
Kids are often very visual and creative people. With that in mind, it makes sense to make budgeting as creative as possible too. For instance, if you plan to save extra money that you can put towards a vacation, get your kids involved in creating a dream-board with pictures of where you’d like to go on vacation. You can put a savings jar in front of this or track your progress towards your goals with visual milestones that your kids can follow.
The more your kids can see what kind of target you’re aiming for, and the easier it is for them to track your progress, the more likely they are to stay invested in your budgeting strategy.
Talking to your kids about budgeting is a good idea, but you need to be realistic about how much they can understand. There’s no point talking to young children about things like interest rates and compounding savings. Instead, you need to include them just enough so that they can get involved, without becoming confused.
Consider the age of your children and ask yourself how much they can understand. For instance, if you’re dealing with young kids, you can tell them that you’re saving money, and explain how the money you don’t spend on one area can go into another area – like a vacation fund. If you’re dealing with older kids, you can talk about savings accounts and earning interest.
3. Discuss Loans as a Family
Speaking of talking to your kids about money, if you decide to take a loan out for anything that you need to buy, then you’ll need to address that with them too. Sometimes, kids can find loans confusing, because they see them as an extra source of cash, without understanding that the money you borrow needs to be paid back.
If your children are old enough to understand things like interest rates, ask them to help you look for the lowest rate by comparing loan options on a comparison website. Introduce them to things like the total cost of the own, and how much you’ll have to pay compared to how much you borrow.
4. Make Family Saving Rules
When you’re budgeting as a family, it’s essential to have rules that everyone can follow. For instance, if you tell your kids that they can’t have any extra money after they’ve spent their allowance for the week, then you’ll need to follow the same rules, by giving yourself a specific amount of money to spend each week too. If your kids can see that you’re all following the same guidelines, then it will make it easier for them to stick to safe spending habits.
Consider bringing your whole family together to figure out what kind of saving rules you need to put in place if you want to achieve your goals. If anyone falls off the wagon, remember not to go too over-the-top either. Sometimes we all make mistakes with money – the best thing we can do is learn from them.
5. Check Up Regularly
Finally, remember that a family budget might need to change over time. As your financial goals, income, and other factors change, you’ll need to bring your kids and loved ones together for another discussion about how your spending needs to evolve.
Don’t make your budget a set-it-and-forget-it concept. If you’re worried that you’re not checking on your budget regularly enough, place an appointment in your calendar every month. This will allow you to check out how well you’re doing in your progress towards your targets, and determine whether anything in your budget needs to change.