Money Talks, So Should You

Q&A: When should I teach my child about budgeting?

Tracy St. John
by Tracy St. John, The Garrett Network  (@FinancialAvenue)

There is no set rule as to when you should begin teaching your children about budgeting.

In real life, kids learn differently and at different ages, but as parents you will know when they grasp numbers and basic money concepts.

READ: Beware the pitfalls of lending money to your children

There are stages, however, related to teaching children about budgeting.

Stage 1: The value of money. What should you do when your grade school children receive money for holidays and birthdays? Show them they have choices and explain the results for each choice they would make.

With first money decisions, you could explain the “share, spend, and save” concept. Check out this website.  Expand on school instruction at home or consider a wonderful book like "Yes, You Can ... Raise Financially Aware Kids" that has many activities, games and comments from parents and what they did or didn’t do to teach their kids about money.

Stage 2: Understanding Expenses and Choices. Your middle- or high-school children may have classes related to money, but now they are watching you more.  

If they see you do things like cut coupons or “do bills” regularly, you are influencing them. If you are making decisions on buying a “big ticket” item, do they see you go to the store and buy or research first? In this stage, the budgeting lesson is related to how money is spent and how money decisions are made. If you buy on a whim, your children will as well when they get older.  

READ: Should kids get credit cards for emergencies?

Stage 3: First financial experiences. High school students may soon have a car and their first bank account and job. Your influence increases even more now as the value of money becomes more real. 

For example: I took my niece to “Midnight Madness” on Thanksgiving evening. She had never experienced shopping at midnight or getting a good deal. At a favorite store that had 40 percent off, she chose a top and then, while in line to pay, received a $10 discount card from a clerk. She paid $2 for a $20 item, and she took notice, looking at me in astonishment to make sure it was true. I smiled, nodded my head and knew she was learning.

Stage 4: Financial Budgeting. Your young adults have now graduated from high school and either chosen to find work or to continue with post-secondary school or training. You can now feel confident that what you’ve taught them will help them handle their finances successfully or, if they still need help, continue to play a role in helping them create a budget.

Your actions related to money decisions will have great impact on your children and how they make financial decisions. If it is a priority to you, it will be for them. Choose to be financially aware of your actions related to money, and your children will be financially successful in the decisions they make.

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Tracy St. John is the founder of Financial Avenues, LLC, a Fee-Only financial planning and investment advisory firm. She obtained her Masters Degree in Family Financial Planning as well as a Certificate in Personal Financial Planning through Kansas State University.