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Budgeting Lesson 1 - Start budgeting at early age

Posted on: 10th Aug, 2006 02:17 am
When I was a Kid, my parents used to teach me about budgeting but I never paid any attention to it. Moreover, very soon I realized its importance when every month I started facing money problem to meet my day-to-day expenses. I realized how valuable it is even for a student to have proper spending plans.

I remember some of the tips which I got from my parents, and it might help you in guiding your kids to manage their money well.
Other Budgeting Lessons

  • Teach them how important is saving.
  • Give them the true picture of your finance.
  • Teach them the value of Money i.e. never give them extra money in their early ages.
  • Teach them how to plan for spending and saving.


Now at the age of 30, I realize how important those lessons were.

Happy Budgeting

Interesting comments jerry. Hope parents will learn from these and I am learning too. :)
Posted on: 10th Aug, 2006 02:42 am
You are absolutely right Jerry. Only a steady plan of saving and investing can help us make our financial dreams come true.

Saving means keeping aside some money on a regular basis. But to save, it’s important that you spend less than what you earn. Reducing your spending is the key to gaining total control over your finances.

But unfortunately most of us do not understand this and spend what ever is earned and sometimes even go beyond that.

Thanks,

Caron
Posted on: 10th Aug, 2006 04:54 am
Hi Jerry,

It's a really a good concept to make the community aware of the importance of 'Budgeting and Finance'.

I want to share my views on 'how important is saving'.

We need to save since we can't predict the future. If we could, then we would know how much money we needed. But none of us know what will happen tomorrow? And that's the reason we should save money.

We often come across difficult situations in our lives when we are in need of money. Just think what will happen? That's the time when we realize the importance of saving. Some of them are:
  • Sudden loss of Income.
  • Sudden illness or accident.
  • Need to repair house (Crack in the roof or wall of your home).

Thanks
Posted on: 10th Aug, 2006 05:15 am
Great post Jerry!!

Now days teenagers are able to make quite a bit of money. Because many of them have a part time job or even a full time job in summers that pay well. So its important for them to understand how to plan for their spendings and savings.

Zeal_Deal
Posted on: 10th Aug, 2006 07:52 pm
Hi Jerry,

I just want to share more on the sections – 'Give them the true picture of your finance' and 'Teach them the value of Money'.

Teaching your children about the value of money is more important than preparing them for employment.

We should teach them the positive and negative meanings of money. For example, we need to show them showing love to someone by buying a gift for him is never more than showing love through actions and words.

Parents should share their feelings, attitudes and their thinking with the children so that they can start thinking in the same angle.

Parents shouldn't hesitate to share their financial position with their children. They should explain that how they are earning that amount of money and how they saved little much of that. This will help to know the value of the money to your children.

While teaching the value of money, the parents should keep these guidelines in their mind:
  • Guide and Advise as a friend.
  • Always encourage and praise your children.
  • Allow your child to learn from the mistakes.
  • Try to include all family members in money management discussions. (As appropriate for their age.)
  • Try to explain with some valid reason your child why he/she can't do or can do.
Children mainly learn form indirect teaching that is through observing their parents activities. So, always try to show them practically what you are doing and what is happening.

Hoping that, it will help the community members.

Later on, I just try to share my views on other sections also.

Thanks
Posted on: 10th Aug, 2006 11:41 pm
Hi,

It's important to educate children on the importance of spending plan. Children should know about the value of money is extremely important - most kids grow up with everything taken care of by their parents. They have no idea as to what it takes to earn money and how well one should use it.

Personal Finance experts nowadays recommend that kids should be given a regular allowance once a week or monthly. Parents should continue to give this allowance so that the kids can themselves prepare a spending plan and learn to follow it.

The allowance will depend to some extent on the needs of the child and also on what his family can afford to pay. They can start off with $6 or so and then increase $1 each year. But parents should take care that they don't give the entire bill at one chance. Rather, they should divide the bill into several single bills.

This is one way by which we can teach our kids that money is not meant for buying stuff; rather it is all about spending within our limit and saving for special occasions like birthdays, festivals, etc.

Thanks,

Jessica.
Posted on: 12th Aug, 2006 11:04 pm
Just wanted to add some more information.

Nowadays many people don't have a spending and a savings plan. When you don't know where your money goes then its very difficult to analyze how to save it.

It's very important that we create a saving and spending plan. This will help you to meet not only our future goals but also achieve your current goals.

So it's very important that you keep track of your spending, and no doubt you will be able to cut down unnecessary expenses save money for your future.

Thanks,

Caron
Posted on: 13th Aug, 2006 10:10 pm
Hi Jessica,

I just want explore little more on 'Teach them how to plan for spending and saving'. Hope it will become additional information for the community members.

'Planning for spending and saving' is called as 'budget your income'. The proper planning helps you in different ways:
  • Get habituated to live within your income.
  • Place your daily needs above your wants.
  • Always set money aside for emergencies.
  • Spend more wisely.
The proper way of planning is calculate your total income and then start budgeting on different expense and saving. The main point is to keep in mind that your total expense budget and saving should be equal to your total income.

And if you want that your child learn to spend wisely, it involves certain amount of trials and mistakes. You should give your child an allowance and insist on approving all purchases which are needed to him not want.

So, in this case 'Parents should hand over the money and try to keep their mouth shut'.

Parent's assistance on spending:
  • Let your children to make mistakes and learn from it.
  • Try to explain your child what quality, availability and other comparison factors mean.
  • Let your child know that it is not possible to buy everything what we want.
Parent's assistance on saving:
  • ] Explain your children the difference between short terms planned saving for a specific need and regular saving for unknown needs (like for emergencies).
  • Try to help your child to set up a short term saving goal.
  • Provide rewards (like any non-monetary gifts) to encourage them to save.

Thanks
Posted on: 13th Aug, 2006 10:10 pm
Wow, what a great post with lots of great input from everyone, this is definately one to print off and follow.

Our children depend on us to set a good example, if we start by teaching them to save, we should also teach them good spending habits. Our child watches and helps me clip the coupons for grocery shopping, it is not a big deal to her yet but she enjoys doing it. She gets more benefit out of spending the time of doing it.

I am trying to teach her to make the right choices, she is still too young to get too much into it. She does take care of her toys to pass on to others, she is especially careful in the car, I tell her that it will be hers someday. Which if it makes it that far, it will be, it will only be 10 years old, that is realistic to me. So these little lesson in taking care of things and making them last is a good way to teach kids to save, you are not replacing things unnecessarily because of abuse.
Posted on: 05th Nov, 2007 05:49 pm
I had to come back and reread this one, it was just as good the second time around. great work.
Posted on: 21st Jan, 2008 01:08 pm
Everyone needs to live on a budget. It will make your money go much further. Many people on this forum are in desperate need of one.
Posted on: 23rd Jan, 2008 06:44 pm
You are absolutely right Jerry. Only a steady plan of saving and investing can help us make our financial dreams come true.

Saving means keeping aside some money on a regular basis. But to save, it's important that you spend less than what you earn. Reducing your spending is the key to gaining total control over your finances.

But unfortunately most of us do not understand this and spend what ever is earned and sometimes even go beyond that.

Well said caron.
Posted on: 23rd Jan, 2008 06:47 pm
"Saving means keeping aside some money on a regular basis. But to save, it's important that you spend less than what you earn. Reducing your spending is the key to gaining total control over your finances." Verty true statment made by guest. What's also is important is leveraging your income - have your money work for you. When you save, make sure your money is working for you instead of sitting in your savings or checking account waiting to pay bills.
Posted on: 18th Apr, 2008 06:02 pm
You can also use ways like these forums to save money, as long as you don't cashout you have a little savings account here right.
Posted on: 30th Apr, 2008 07:29 pm
Yes great posts from everyone! I dont have any kids now but it is something that will definately be engrained in my young'ns. From my perspective of not having children now I have to watch others children and see how they act about money.

In my opinion, teaching children to start saving and investing goes hand in hand with teaching children to be heavy producers and lite to moderate consumers. I think Warren Buffet is the BEST example of this conditoning. Self made MULTI BILLIONARE that lives in a modest home and drives a 4 year old Lincoln. (At least last time I saw him talking about it thats what he had) Most children like toys and things of that nature which is fine and normal, but it conditons them early to like, want, and needs "things". So with that conditoning the need for "things" goes from toys, to clothes, to electronics, to cars, homes etc. Which is all fine and good but the focus is on consuming and acquiring "things" and not producing value. It develops a need to look good.

If you think about it, why do most people not want to work, but everyone wants the world? You can find people ALL DAY that want a million dollars, want the nice house on the lake, want the big SUV. But you will be hard pressed to find people willing to work smart and hard and be dedicated to helping others to achieve those wants. Most would rather play the lotto (see post in money merge discussions). This mindset is engrained in them at early ages and hard to reverse in later years.

With young people introducing them to investing say, as a mid teenager, they will more than likely view it as useless because its not fulfilling an immediate need, they cant get something from it "right here right now". But taught at a very young age the principles of investing and producing value becomes second nature and doesnt need to be taught. It will stay with them for life more than likely. Your establishing the right conditioning.

Then they can have better toys than all the other youngsters and some adults!

I like the idea above of not giving kids too much money, great idea. Giving them too much money develops the "money grows on trees" idea that leads to overspending/overextending credit. Again I dont have any kids, these are just observations of other peoples kids and things I have had to change about myself.

Good day everyone!
Posted on: 15th May, 2008 07:24 am
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