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Securing a child’s financial future is always of paramount concern for parents. From IRAs and trust funds to CDs and stock investments, there are so many options available. However, budgeting is equally as important in forging a sound and protective financial future for your kids. While most of the burden usually falls on parents, there are many ways to teach children about financial budgeting for the future. In fact, this also helps educate kids about the world as a whole, while teaching them the importance of responsibility and self-maintenance.
Budgeting always comes down to two simple factors: how much you earn and how much you owe. You simply take your monthly earnings (work-based salaries, investment incomes and other earned revenues) and allocate portions for bills and payments. These may include:
These are known as vital necessities – and these bills must be paid. Non-essential expenditures include social activities, movies, vacations, outside dining and, in some cases – clothing. While your kids probably do not pay rent or mortgages, they must understand the differences between vital and non-vital necessities.
Most kids receive monthly allowances from parents. Older children may also work and earn small but sustainable incomes. Whether via allowances or earned income, here are a few ways to help your children develop sound and lasting budgeting plans:
By listing their daily schedules and activities, kids will be able to monitor their spending on a weekly and monthly basis. If they find themselves out of money by the end of the month, chances are they will need to rethink their expenses and try to curtail unnecessary purchases that leave them out of pocket.