With a huge number of Americans still trying to bounce back from therecession, it is more important than ever for parents to teach budgeting, andencourage their children to put it into practice. If this task seems more thana little overwhelming to you, you’re not alone. Why do you think so manyparents have welcomed home “boomerang children”–college graduates returning tothe nest to let Mom and Dad foot the bills?
Teaching your child to budget doesn’t have to be daunting if you break itdown into small steps. That’s why I wanted to share a few simple ideas abouthow to raise budget-conscious teens. I hope these five steps will help you andyour child begin a dialogue and give him or her some practice handling money onhis or her own. This post is one of two on this topic. Today, I just want youto think about:
Show and Tell.Your budget, that is. There may be no better way tohelp your child understand budgeting than by involving him or her in managingyour own. Your child needs to be aware that you make decisions about money manytimes every day, and how those decisions effect today, tomorrow, and longerterm.
Preparing the WayIn this particular case, I am notrecommending you sit your child down and go over spreadsheets about thebudget. I think you will find it more comfortable and find your child morereceptive if you discuss the topic more casually (most students don’t get tooexcited about sitting down with their parents to discuss finances). Instead,try to integrate the message you are trying to convey into everyday life. Readon, 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 aremade–but where do you begin? Whether your household budget is barely undercontrol or a well-oiled machine, it probably has too many components for yourstudent to grasp all at once. Begin with baby steps.
Let your child see you paying bills, and ask if he or sheknows much about it. You can talk about how you manage and track eachexpenditure, pay each bill (online, automatic payments, writing checks, etc.)and how often (weekly, monthly, etc.). Don’t forget to let your child know whathappens if you’re late on a payment.. Use once-a-year bills,such as your car registration, as a starting point for talking about irregularexpenses with your child. He or she may have seen you paying bills on a monthlybasis, but now you can talk about how you fit those yearly or unexpectedpayments — 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 thiseasier than handing over a credit card) and have him or her try to stay withinthe budget.. Explain what is and isn’t in your budget. Forexample, if your child wants to go out for dinner but you’ve spent yourdining-out funds for the month, simply say so. Along this same vein, when youtake a weekend trip you might explain that you saved a certain amount eachmonth in order to cover the costs of the vacation, and that this amount wasincluded in your monthly budget, too.There are a myriad ways to let your child become more aware of and involvedwith your family’s spending plan, so watch for them to present themselves inyour everyday life. You don’t need to set up a curriculum, just take advantageof the teaching moments as they appear.
Once your child heads off to college and begins to manage their dailyaffairs, he or she will likely appreciate the tips and education you providedahead of time on how to manage a budget. (My son actually made a special phonecall to me from college in his freshman year thanking me for making sure heknew how to manage his money and time, do his laundry and cook as he watchedsome of his friends struggle with these tasks. To me, that day was one of themost satisfying compliments I have received about being a mom!)
All the best,Deborah Fox
Deborah Fox is the founder of Fox CollegeFunding®, a nationwide company that helps families findcreative ways to reduce their college costs.