Budgeting can be like visiting the dentist: as much as we try to avoid it, it is a necessary evil. Without it, we most likely would end up at the mercy of the luck of the draw to have the life we want to live. And because we want the best of everything for our children, it is our responsibility to teach it to them.
The topic can be a bit boring for us adults, let alone children. There are ways to make budgeting more exciting for kids, though. Here’s how:
Children should know what budgeting. Explain how it can help them get everything they every wanted because it makes managing their money easier. Simply, it’s all about how much money they are get (earn), how much they use now (spend), and how much they keep for later (save).
Earnings – Spending = Saving
A simple way to start is the 50/30/20 budgeting rule: 50% of earnings goes towards needs, 30% goes towards wants, and 20% towards saving. You could change the percentages, but this is a good way to start.
The best way for kids to learn about money is to work for it. To start budgeting, we need to think how much money is coming into our pockets. And this is a great way to grab their attention!
If you haven’t done so already, setup allowances and chores for them to earn. Figure out how much makes sense based on how old they are, what costs you’ll be covering, and what they need to pay for.
For their allowance, make sure to give them a little less than what they need. That will motivate them to find other ways to make money through chores. You can assign them things like clearing the dishes, tidying their toys, or reading every day for 30 minutes. And don’t forget to share how much they can earn by completing each.
Luckily, we no longer need to remember running to the ATM to get cash for allowances and chore money. You can simply digitize and automate the whole process by setting up reoccurring allowance transfers through Verity App, so you don’t forget.
When we think of saving, we think bank accounts. Today, there are family banking apps and prepaid cards without the hassle of opening a separate bank account. Just set it all up while relaxing on your couch without long queues or lengthy paperwork. With a tool like Verity, saving gets interesting with Saving Goals.
Children will rarely save just for the sake of saving. They need something to excite them, something solid, something visual. That’s where the magic of Saving Goals happens.
Saving Goals are things we want to save for. They’re our dreams. Our aspirations. They are our future selves, who, how, and what we want to be. They have a purpose. They give your child’s money a purpose, too. And they’re a great tool to tame that need for instant gratification – at least most of the time.
Saving Goals can be anything: new Air Jordans, pocket money for a trip, giving to a charity, or even investing. Adding Saving Goals on the app will make them real. With a picture, a total amount, and a progress tracker, kids get motivated. You can give them an extra incentive by matching their savings.
Now that we’ve covered earning and saving, be sure that they’re ready to spend. We all know that most children just NEED to buy what they want. They should understand, though, that needs are things like food, clothes, and water.
They know most of what they want to buy because of their Saving Goals, so it’s important for them to see where their money is going by tracking it! That’s how they can tell if they’re sticking to their budget or not. Using the Verity prepaid VISA debit card helps them see all their expenses through the app. They can also find reports analyzing different spending categories to better understand their spending habits.
Once children start earning their own money, it’s a different ball game. It could be the start of a lifelong learning journey towards living the life they want to live. Teach them budgeting through the right tools for it to become a lifelong habit.