If You Don’t Do It, No One Else Will
One of the best things we can do for our kids is to educate them early on about personal finance.
I don’t remember ever getting any sort of financial education or advice as a kid. In fact, I was only ever taught 2 things about money in school:
- How to write a check
- How to play the stock market (and I mean “play” as in pick a random company to “invest” in, not the more sound principles of index fund investing)
In 18 years (k-12 plus 2 college degrees) I literally had 2 instances of financial education. And both were about how to spend (or gamble) money.
Is it any wonder we have such a huge debt problem in this country?
Given my own background, I made it a priority to start teaching Little Go From Broke about money at an early age.
How We Do It
When Little GFB was super young, we started simple. We’d have him put spare change and a portion of any gift money in his piggy bank.
When he was ready to start being more intentional with his savings and spending he graduated to his very own YNAB budget.
Budgeting can be tough when you don’t actually have any money to budget. So we set up a payment system that includes a base $2/week plus any additional earned money from special chores.
Payday is Monday and together we allocate that money into the different categories in his budget.
While I try to help him consider all the variables when he’s budgeting, I want it to be his decision. The only thing I insist on is that he pays himself first. Ten percent goes straight into his savings category.
The other categories consist of toys and games he’s saving for and any gift giving expenses that may come up.
He’s responsible for any birthday and holiday gifts for his friends so he needs to plan accordingly.
Many adults struggle with the idea of budgeting for your true expenses (car registration, insurance, Christmas, etc). Having Little GFB be responsible for his friends’ gifts is the best way I can think of to teach him to budget for upcoming expenses and not just his own wants.
How It’s Working
This process has been working really well for us. It’s been a pleasant surprise to watch him carefully consider his choices both in budgeting and spending.
I’ve noticed a couple interesting trends so far.
First, the gift-giving categories tend to take priority.
Second, even after he’s reached a savings goal, he often chooses not to make the final purchase.
I don’t know how unique he is in his hesitancy to spend his own money, but I do know the more practice he has at being deliberate with his spending choices, the better those choices will be.
How It’s Changed My Behavior Too
I’m thrilled Little GFB’s embraced budgeting, but I’m even more excited that he’s mastered something so many of us struggle with: delayed gratification.
Patience is not my virtue. I’ve always had a tendency to rush into buying whatever strikes my fancy.
Usually, I’m able to find the money to cover the spending, but it’s not the healthiest attitude to have toward your finances.
Little GFB is also an only child, so the urge to spoil him is a real one. But by embracing deliberateness in my own spending, I’m not only limiting those spontaneous splurges, but I’m also setting a better example for him.
Now, whenever he asks for something, I simply reference his budget and give him the option to move money around to afford it, start a new budget category for it, or add it to his Amazon wishlist and wait for Christmas or his birthday.
Setting Little GFB up with an allowance and his own budget has not only helped him learn to prioritize, but it’s helped me be more patient and deliberate as well.
Give It a Try
Teaching my kid how to budget has had a hugely positive impact on both him and our family. We’ve all learned to be more patient, more deliberate and more thoughtful when it comes to spending money.
I encourage you to give it a try. Start with a piggy bank or a few jars to separate out their spending money from their savings.
It doesn’t have to be fancy to be effective.
The earlier you introduce your kids to the concept of budgeting, the more natural it will be for them to question spending temptations as they get older.