Budgeting is a very vital part of most people’s lives and the earlier they can get to grips with doing so, the better. Children as young as six or seven are sometimes given pocket money, which helps them learn how to handle money and understand its worth. Once children are competent at sums, they can be trained to keep a simple budget that can then be developed as they grow into their teens and increase their spending habits. There are some simple ways to create a budget for a child.
Keep an eye on her spending habits
Once you have decided that you want to teach your child how to budget her money, spend a couple of months noting her spending habits. This may be simple if your child is very young and you are always with her when she buys things. If she is a little older, you may need to probe gently, especially if she takes money with her when she goes to school. Also decide if you are simply to base a budget around her pocket money, or if lunch money and any other outgoings should be included too. While noting what she spends her money on, discuss the value of money and how important it is to remain within budget.
Make it fun
If you turn budgeting into a chore, your child is likely to resent doing it, so try to turn it into a game, particularly if they are 12 or under. Perhaps you could have a wall chart on which your child sticks fake coins or stickers for every pound or dollar spent. It will give your child a visual record of her spending, as well as enabling her to see how much she has spent. You could even come up with a system whereby the value of her pocket money in fake coins is on one side of the chart and she then moves it across when spent.
Download a template from the Internet
For slightly older children, if you want some ideas for budgets, the Internet is a great place to start. A number of sites such as moneyandstuff.info and pbskids.org have fun template budgets that you can either print off or fill in electronically. Encouraging your child to keep a hard copy may be the best way forward so that you can easily keep an eye on how she is doing. Select a template according to your child’s needs and based on what you know about her spending habits – this may involve some altering of the template to suit your child.
Create a simple table
If you cannot find what you need online, or you don’t have regular Internet access, it may be easier to create a simple table. You can either use Excel, which you can then program to do the summing up for you, or you can create a table in Word. Failing that, you can always draw up a table by hand. To begin with, your child will probably only need two columns – one for the name of the item purchased and one for a running total – either subtracted from the amount of inflow, or added up to remove from inflow at the end. As time goes on, you can add rows and columns as necessary.
Look for relevant courses
It is in banks’ interest to advise future clients on how to handle money; some banks or other financial institutions may provide face-to-face budgeting courses for both children and adults. Ask your own bank if they offer such courses. If there aren’t any physical courses available, there are courses online that provide useful information, such as this one offered by the Royal Bank of Scotland. As well as offering useful information for children, RBS also offers suggestions for parents and teachers. If you don’t feel that your child’s school teaches budgeting adequately, suggesting resources like this may be a good way of changing things.
A mini-budget for a child doesn’t need to be remotely complicated; it just needs to show basic inflow – such as pocket money, birthday money and money earned for doing chores. This then provides a foundation for more complicated budgeting in due course.