Budgeting

Budgeting

Drawing up a budget can seem more like a penance to your children than something constructive. It is up to you, as a parent, to make it fun. Children need to understand that a budget is basically a saving and spending plan. The emphasis should be on saving and not on spending. They need to know why they are saving and how long it will take to reach a savings goal. This relates to the point about not providing your children with an endless stream of gifts, because this will result in an absence of items that your children can acquire only by realising their savings goals.

Budgeting will cultivate the adoption of good savings habits by you and your family. These include trying to save at least 10 percent of what each family member earns every month. Impose controls on your finances. Spend wisely. Save carefully to build your financial resources. The younger a child, the less likely it is that he or she will appreciate long-term savings goals, such as at four years starting to save to buy a car at age 18. For younger children, the savings target will be to buy cheaper items, such as a cricket bat or an iPod.

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