How can I teach my child to budget and manage money?

Michele Borba

Psychology

Here are some tips to help you teach your child how to budget and manage money:

Establish a set budget. Set a budget that works for your family and share that with your kids. Explain that you need to cut back from last year and that spending may not exceed the budget. Now create a shopping list based on wants not needs to help prioritize spending. And cut the guilt!

Announce clear rules for clothing and apparel buying. Set a limit on stylish "want" items and a clear dollar limit on nonessential items. Stress that anything beyond that amount must be purchased out of the pocket of your child. Then if your child insists on that pricey purse that's beyond the budget, encourage her entrepreneurial spirit to set up a lemonade stand, mow the lawn, or babysit for the neighbor next door but keep your wallet shut. Any request that deviates from those rules is an immediate, "No" and will save on the bickering. And encourage your child to buy clothing in solid colors. Items will mix and match more.)

Be a bargain hunter and wait for sales to shop. Get your kids involved in checking those penny saver deals. Have them clip out those coupons.

Use advertisements to teach kids how to save money on required school supplies and compare prices. Saved money can go toward non-essential items.

Make sure your child goes to the register. The shopping process isn't complete until your child goes to the check out. This is when he learns to make those tough fiscal decisions and the importance of sticking to a budget. And if your child is over his limit, make him decide which unnecessary items to remove. It's also a great learning activity to have him check the receipt once the shopping is done.

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