I wrote a while back about some of the money-related topics we've been covering this summer for our personal finance/economics discussion. You can read the initial post here.
One topic we've introduced is the idea of budgeting. Budgeting is something that adults use both in their homes as well as in various career fields. It's not just adults that need to know this, though, it is applicable for pretty much any kid who is old enough to go shopping.
Let me share with you what budgeting means to my 13 year-old:
*Number One Answer: Budgeting is useful "so you can have money". (This is interesting, because it shows a positive attitude toward budgeting, versus something that's a dreadful chore.)
*Budgeting is a plan for "knowing what to spend and what not to spend".
*It includes "keeping things in reserve".
*You need to "spend less than you bring in".
*"If you don't budget you have negative money." (Debt)
As today's title suggests, we had a real-life experiment with budgeting a few weeks ago, when we took a six-day field trip. Two days of driving were followed by two days of touring and another two days of driving.
The logistics, discussed the week before the trip:
*Each child had a certain amount of money that they were given to spend.
*Each could add some of their own money to that amount if they wished.
*They planned out how much money they would want to have for driving days as well as days at the actual destination (six days total).
*They added up the amounts and found that they either would go over their amount or they could actually add more money to their budgets on some days.
*They took this information and made their final plans for how much money they could spend per day.
*Each time they spent some of their money on the trip, it would be logged so they knew how much money they had left for that day as well as whether they were running over- or under-budget.
*Each child came in under-budget. Since the money was theirs to spend, they kept it for something that they might want in the future.
This planning only took about ten minutes before the trip, and about a minute each time someone spent money.
One great thing about this method is that it really prevents arguments about money during the course of what is supposed to be a nice trip. We all know what we have and we can make decisions along the way about the things that are really important to us, versus things that are less important. Another positive thing is that knowing how to set limits for ourselves is not just for kids. If they can determine needs versus wants now when the stakes are small, maybe it will help them make decisions when they are adults and the stakes are a little bigger.
We have also explored ways to introduce the concept of budgeting (planning, making choices, evaluating along the way) with non-money opportunities. The kids have explained that you can budget tickets at a carnival, the number of hours you have on your day off, and the set amount of electronics time you're given. It's also similar to making plans to finish a book by a certain date, choosing x number of your favorite hot lunches for the month ahead of time, and making those cookies last all week. I love the idea that budgeting can be a positive experience. It doesn't have to be about restrictions and disappointment. Instead, it's about figuring out what's really important to you both for today and tomorrow.
Is budgeting part of your personal finance discussions with your children? What has worked and what has been less succesful for you? This is one area that sharing ideas can really be useful to others!
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