Money Smart Kids Become Successful Adults - Money is needed for everything from the birth to the death and everything in between requires money. You will need money for food, housing, to commute from one place to another, for entertainment, to stay connected, to get education etc. As a parent start out early and teach kids importance of money. One of the top money skills to learn is how to budget, show your kids how to maximize the money at disposal to fulfill their needs, occasional wants and to lead a fulfilling life.
Create sample lifestyle budget with kids. This will engage them and will teach them about the money basics. The budget breakdown can show scenarios of renting vs. owning. Here is a monthly budget example:
- Housing - Renting vs. Owning
- Savings & Investments - Monthly contribution, and show how this money is invested and kept as emergency funds
- Food - Show them the cost difference between cooking at home and eating out occasionally or often.
- Utilities – Average monthly utility costs (gas, electric, sewage and water)
- Healthcare – Monthly costs of medical insurance, copayments and prescriptions
- Clothing – Discuss the importance of needs vs. wants, looking out for discounts and sales, designer vs. casual brands
- Transportation – Discuss transportation options and associated costs, biking, public transportation, buying new car vs. old car, assets and liabilities. Discuss average monthly cost of gas, insurance and budgeting for repairs.
- Home furnishings & supplies: New vs. Used
- Cellphones / Data Plans – Discuss monthly cost for the service, and extra cost for over usage
- Internet services – Average cost of internet services
- Entertainment/Hobbies – Be sure to tell them to allocate budget for entertainment and show them costs associated to various entertainment options.
- Education – Private vs. Public schooling options, school material.
During the budgeting exercise, emphasize on the importance of living within the means, saving for future and introduce the concept of giving back through philanthropy and volunteering.