|
Tools To Help Teach
Kids About Money
 Budgeting
A budget is a plan for our money.
It helps us manage money more effectively.
Needs vs. Wants
One of the
most important things kids need to know in order to
effectively manage money is the difference between a
need and a want. It may seem like common sense, but
there are levels to needs and wants so it tends to
get a little complicated. For example, shoes are a
need but are Nike Air Jordans a need?
It's important that we get kids to reflect on these
differences so that they can then make good money,
and ultimately, good life choices.
A fun exercise to do
with your kids is to go through magazines and cut
out pictures of needs and wants. Kids can glue
these onto a piece of construction paper with the
labels 'needs' and 'wants' at the top. You may
find that this simple little activity lends itself
to a lot of great discussion.
Registry Worksheet
Now that your kids
have a handle on needs and wants, it's time to keep
track of their income and expenses. Use the
Registry worksheet
to teach them how to record their
income and expenses and keep a running balance.
While your kids keep
track they'll be learning new vocabulary such as
income, expense, and balance. As you use
this new vocabulary, kids will become more
comfortable with it. Knowing and understanding
'money' vocabulary is an important step towards
financial literacy.
Creating a Budget
If you want to go to
the next step with your child and create a budget,
you'll need the Registry worksheet with one month's worth of
data along with some colored pencils.
Color-code all the same type of items in the
registry. For example, if your child spends
money on snack-type foods, then highlight all those
items with the same color. Add up the amounts
in that 'snack' category. That's about how
much your child can expect to spend each month in
that category, although at this age, this amount can
vary greatly. Do that with all the
color-coded categories then transfer the data to the
My Budget worksheet.
To underscore how
little amounts can add up, choose one of the expense
categories and multiply by 12 months. It's
usually an eye-opening experience to see how much
just two trips a week to a burger joint can cost
over the course of a year! Click here for a
sample
My Budget worksheet.
Now analyze their
budget. How much are they spending in each
category? Are there areas where money can be
saved? Is it possible to set up some personal
financial goals with the money left over?
Partially excerpted from the book,
Raised for
Richness, by Karyn Hodgens
|
