The kids have spent their Christmas money and they’re pestering you for treats. You’re still feeling the pinch from Christmas, what do you do?

Why not teach your kids the basics about budgeting?

Budgeting At Home

Kids who learn about money at home are more likely to be better with their money when they’re older. But when and how do you start? Here are some useful tips to get you going!!

Ages 4-7

From ages four to seven your kids are starting to understand the world and how things work. Answer any questions your children may have about money. Be honest with them. Keep communication about money open, positive and factual to avoid scaring them.

Ages 7-12

Between the ages of seven and 12, if you can afford to, start giving your child pocket money. This gives them some finances to play around with and spend. Give your kids chores to do and when they’re finished, reward them with pocket money. This reiterates that if they want money, they have to work for it!

The next time your child asks for something they want, encourage them to save for it with their pocket money. Talk to them about how much it costs and what chores they’d have to complete to earn enough to buy it.  RoosterMoney is a handy tool for pocket money management, as is Jangle.

Encourage them to open a savings account to store their money. Talk to them about different savings accounts and the differences. For example the difference between a savings account and an ISA.

This is all well and good, but what if you don’t have much cash to spare for pocket money? There are other ways to teach budgeting.

Sweet Jar

Why not give your little ones a jar of sweets, but they can only eat five sweets on a Sunday. This teaches them to wait for the things they want, instead of getting instant access.

Play Shop

Playing shop helps to teach kids about money and the value of everyday items. It can help their mathematical skills and understand money handling.

Ages 12-15

As your children get older, teaching your kids to budget gets harder! Start to explain to them what things you pay for around the house. Tell them about your rent or mortgage, what bills you have to pay and when. It’s important to explain about the added extras you’d sometimes forget.  Broadband and mobile phone costs are often forgotten about but soon stack up. Teach them how you prioritise bills.

Talk to them about the difference between credit and debit cards – that with a credit card you have to repay the amount you borrowed, plus the extra interest, whereas with a debit card you pay from your own money.

Ages 15 -18

From this age you can start to get more technical. Show them your wage slips to explain how much you get paid and how tax works. Tell them how much you spend on groceries a week, what the common bills are and how much these cost. The more detail you can give the better.
Show them how you budget and encourage them to do the same. There’s some free budgeting apps which you may find useful; Mint and Wally. Unsplurge helps your teen keep track of their savings.

When your child starts to work use their wage as an example for if they lived alone. This gives them the understanding of how quickly money can disappear after bills. Another option is getting your child to pay rent to you, it doesn’t have to be a lot. This helps to get your child used to expenses they’ll come across as they get older.

18 Onwards

This is a difficult period as your child may now start working full time or preparing for further education but it‘s time to encourage financial independence. Some parents may wish to start charging their child rent (if they are working) to help with family expenses.

If they’re not working but rather in further education it can be harder to teach them the value of their own money. But not to worry because when the time arises you’ll be there on hand to offer help or guidance.

Teaching your kids how to budget isn’t going to be easy but it will help them manage their finances later in life.