When a child joins your life, many thoughts and uncertainties quickly fill your head. Teaching about finances may get shoved to the back burner and before you know it your child is leaving home. It’s crucial to understand that many money habits are set by the age of 7. Luckily children as young as 3 years old can learn money concepts. The work starts with your own habits because children learn from examples.  

How do you feel about money? What were you taught about money through the adult examples you witnessed? Are there areas you need to improve in your own financial situation? Don’t worry if you feel like you don’t know where to begin. Websites such as MilSpouse Money Mission and the Consumer Financial Protection Bureau (CFPB) have a lot of easy-to-follow guidance. This article will focus on the concept of budgets and spending plans. 

Between the ages of three and five, introduce the concept of money, explain the difference between needs and wants, and talk about your job and how money from your job pays for things. Remember little ears are listening even when they don’t appear to be. When you speak about your budget, do so in the most positive manner possible. Make it about what you are choosing and not saying things such as, “we can’t afford.” This will reinforce that there is control and stability with your financial situation instead of placing concern or worry in a child’s mind. For example, you are choosing to pay for rent instead of buying non-essential items. Talk through even your most basic financial decisions. For example, when choosing the store brand products explain that it is less expensive. Explain you are choosing a name brand because you have a coupon or because you are avoiding certain ingredients. This will provide clear reasoning for your child instead of assumptions that may be incorrect. 

At the age of six to nine, start an allowance and discuss what a budget is. This does not have to be a high amount. This amount can be connected to household chores or not. In my house, there were chores that led to the allowance being paid and there were chores that were completed because the child is part of the family. Mom and dad do not get paid for their household chores, but they can get paid for other work. There are many tips for having an allowance. Choose which are best for your family. 

From ages ten to twelve, focus on teaching how to stay within a budget by seeking out sales and creating shopping lists. You might decide to heavily increase the allowance so that the child is now responsible for covering an expense such as clothing. This can help reinforce healthy budgeting habits. If the child watches for sales or uses coupons, then they can buy more clothes or save more money for other wants. If the child wants designer clothes, then the child will have less clothes to choose from. Since your child is still under your supervision, you can discuss the pros and cons throughout the process.   

Between the ages of thirteen and fifteen, discuss the family spending plan. Identify which are needs and wants. Determine which items could be eliminated if the family income decreases. 

During the ages of sixteen to nineteen, it’s time to focus on making your teen able to stand on their own financial feet. Have your teen create and follow their own budget. Assist your teen in finding employment and determine which expenses the teen is responsible for. Show your teen different tools to track and organize the budget. Remember that your teen may learn differently than you. These tools include websites with simple budgeting forms such as powerpay.org, CFPB, FINRED, Milspouse Money Mission, free mobile apps connected or not connected to bank accounts, a customized budget on Excel, or columns in a notebook. The most important thing to remember is that if one style doesn’t work, move onto the next option until your teen finds the best fit. Each concept should be tailored to your child’s specific learning strengths. 

Random children were asked, “How do you create a budget?” Here are their ages and answers. 

6 years: “I think that’s where you have 20 bucks and have to decide if we want to get gas or go hungry.”

7 years: “By saving your money.”

8 years: “Not sure.”

8 years: “Budget? It’s all mine. Why do I need a budget?”

10 years: “Spending money wisely.”

11 years: “You find things in a certain price range and add it up and that is a budget.”

12 years: “Go over how much everything costs.”

12 years: “Budget?”

13 years: “You list what money you have, and/or will get and list what you have to buy and things like that.”

13 years: “Pick out how much money you have to spend on each item.”

14 years: “You see how much money you use on everything and cut it short.” 

18 years: “Figure out your income then add the bills and see what you have left over.”

19 years: “You create a budget by tracking your income, expenses, investments, basically anything that involves money you keep track of it. Also determine how much you should spend on a monthly basis.”

Do you know how your child would answer? Let’s make certain to set your child up for success. There are short videos to watch, books to read, interactive money games, and so much more to teach you and your child how to create a budget. 




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