Family budget – what your kids should know

There’s a meme doing the social media rounds that says, “My greatest childhood memory is not paying bills.”

Most adults can relate to that. But on the other hand, experts say ignorance isn’t necessarily bliss when it comes to the family budget. In fact, protecting your kids from your financial ups and downs does little to prepare them for the future.

There’s a lot to be gained by your children seeing your struggle and effort to organise your home finances. These are real things, and real issues that kids need to experience in order to become more sensitive to how money is spent, what things cost, and that money doesn’t grow on trees.

That’s not to say that you want your kids to take on an undue sense of responsibility or to worry about where you are going to live. But including them on the basic workings of your family budget can prepare them for the future so that they don’t flounder when they start getting a pay cheque of their own.

Of course, it’s all age related: a budget conversation with a 5-year-old is going to be very different than that with a 10-year-old; the first being very generalised and the latter more specific. But by the time they are teenagers, they should have a pretty clear understanding of what it takes to pay for your style of living, as well as what it would take for you to have a higher or lower cost of living.

1. How much you pay for where you live
The cost of your home is typically the largest chunk out of your family budget. Letting your kids know how much it costs you can help them to appreciate it more and look after it better. Let them know it is a shared investment for your family and that each family member is responsible for looking after it.

2. How much you pay for utilities
Kids are chronic for leaving on heaters, lights and appliances, without any consideration for how much electricity costs. That’s because they don’t usually know how much electricity costs.

3. How much food costs in your home
Take the kids with you on a grocery shop so that they can see how much things cost on average per week.

4. How much you spend in general on vacations, holidays, and birthdays.
A good family budget takes into consideration that “extras” pop up on a regular basis. Letting your kids know how much it costs you and how much you have to budget each week to make it happen, can help quell any sense of entitlement and encourage appreciation.

5. How much you save and why
One of the greatest things that you can teach your kids is how to save, and to watch those savings grow. Make a family savings goal – i.e. maybe to buy a new television – and work together as a family to achieve it. Forgo little extras and put that money into your savings, and encourage your kids to put a part of their pocket money into it too.

6. How much you make gross and net, and what you pay in tax
Nothing is surer in life than death and taxes – so teach your kids about how much of your money goes on tax, and what your taxes pay for.

Other things to talk with your kids about include the costs of entertainment, transportation, insurance, clothing, and extra-curricular activities.

Kids are great visual learners, so consider putting your family budget into a pie graph so that they can see which necessities make up the biggest chunk. Then break it down into their world: If they receive a weekly allowance, carve it up into the same percentages on the pie chart, i.e. if they receive $10 a week, perhaps $3 – $4 of that would go on housing, and $1 on food.

Happy budgeting!

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