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management skills are more likely to be able to handle adult financial decisions such as purchasing insurance, using credit wisely, paying taxes, investing, and saving for retirement plans.
Consider sitting down with your children and creating a simple spend- ing plan using the following as a suggested example. Help your kids grasp the importance of planning for purchases and catching the vision of smart money management. Concerning the “Rules” section of the plan outlined on the next page, you may consider setting ground rules about setting aside a certain amount in savings before the purchase can be made. Or, you may want to establish in advance what amount of the total purchase (if it’s a large item) you as the parent would contribute to the purchase. (See the form on the next page).
2 . Envelopes Can Help Keep Kids from Pushing the Spending Envelope
The first step in establishing a workable monthly budget is to deter- mine where all the money is going by tracking every purchase, even for the small things like a soda or a bag of chips from the vending machine. If you carefully track your spending for three months, you’ll have a clearer picture of your spending in order to establish realistic amounts for each budget category. You’ll also be able to see where you need to cut back to ensure you have the money to cover all your necessities.
Keeping good records of money saved, invested, or spent is likewise an important skill that young people must learn in order to be responsible money managers as adults. To help your children learn how to track their spending, consider creating the following system for each of your kids. And remember to involve them in the process. Make it fun!
Use 12 envelopes, one for each month, with a larger envelope to hold all the envelopes for the year. When your kids make purchases, encourage them to store all receipts in the envelopes and keep notes on what they do with their money. Every three months or so, review the
Teaching Children About Money