Teaching kids to manage their spending
Knowing where their money goes helps kids to control their spending and saving.
Here’s a question for you: how often do you go through your bank statements line by line? It’s one of those tasks that can very easily be put in the too-busy-to-do-right-now basket.
There’s a lot of benefit, though, in carefully reading your bank statements once each month as it shows you quite clearly both where your money goes and how much you are saving. Once your kids have their own spending and savings accounts it’s a fantastic habit for them to develop as well, for the same reason.
Where their money goes
Having a written budget – a month-by-month plan – as to how pocket money will be spent - is a good idea for kids. And once they begin using a debit card, checking their transaction account each month will let them know whether they are sticking to that budget.
It’s a terrific learning experience. If your child finds that their monthly spending is vastly different from their budget, then a change to either the budget or their spending is in order. If they find that their budget and their actual spending match up pretty well, there’s probably no need for a change. Either way they’ll have the satisfaction of knowing that they are in control of their day-to-day costs.
How much they are saving
Once kids reach the tween and teen years, they may well have some long-term savings goals. Whether it’s spending money for the next school holidays, money for an overseas trip in the future, or starting to save for their first car, there’s likely to be something that they want to put some cash aside for.
That said it can be tempting enough as an adult, let alone as a child, to spend rather than save. Checking their savings account each month means they can see their savings grow – which can help motivate them to keep on going.
Checking their savings account regularly means that they’re also reminded about the benefit of earning interest on their savings. After all, it’s not just the money that they are putting away, it’s the earnings on that money as well that will help them reach their goal. If they have an account that offers bonus interest for regular savings, that’s an added incentive.
It’s also great to do these things with your kids. You could download your bank statements at the same time and make it a team effort.
For more money management articles and tips, visit the Beanstalk.