Even if your child is years away from being able to move into his first apartment, it's never too early to start teaching him about the budgeting process. Interactive budgeting activities teach kids the money management skills they will need to ensure a solid financial future by demonstrating key concepts with practical hands-on experience.
Monopoly Money Budget
Young children often have a hard time comprehending the meaning behind numbers on a spreadsheet. To better illustrate how a budget is made, give your child a stack of play money to represent his monthly income. Then, go down the different monthly categories and have him pay you for expenses like housing, utilities and food. Explain that the money left over when you pay for all of your necessary expenses is what is available to spend on items like movie tickets, candy, toys or video games. Discuss what the consequences would be if you spent your money on non-essential purchases before making sure you had paid for your basic expenses.
Keeping a money diary can be a great way to encourage older kids to think more carefully about how they spend their money. On one side of the page, your child can keep track of his allowance and any money received as a gift or earned by doing extra chores. On the other side of the page, your child can write down expenses for the week. Expenses can include money put in savings, gifts for friends or family members, snacks or any small toys that your child has decided to buy. Explain to your child that the goal is to make sure that his expenses are equal to or lesser than his income.
Splurges and Sacrifices
Learning how to tell the difference between needs and wants is an essential budgeting skill. Give your child a sample budget and have her decide which items to cut in order to find the money for the luxuries she wants. For example, if you have a budget for back-to-school clothes, help your child decide how to spend the money wisely. Explain that if she spends all her money on designer sneakers, she will have minimal money left over to afford new shirts and jeans to wear with her shoes. Help her compare prices for various items by going through store fliers or using an online comparison shopping site. The goal is to get her to realize that a splurge in one area will require a sacrifice in another.
Online Budgeting Games
If your child likes computer games, the Rich Kid Smart Kid website has a series of games that are designed to teach money management in a fun and engaging way. For example, the "Pay Yourself First" game talks about dividing money into giving, saving and investing categories in order to build long-term financial stability. The games have levels for grades K-2, grades 3-5, grades 6-8 and grades 9-12.
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