My husband and I had the opportunity to participate in a preparedness class on personal finances created by The Church of Jesus Christ of Latter Day Saints. While we already did most of the things that were taught in the class, the biggest take away we had from the class was the need to teach our children the importance of managing finances. Creating a budget, living within your budget, and staying out of debt.
In the book Fundamentals of Family Finance it says, "[t]each your children to live joyfully within their means. Children must come to understand that money is finite and that when it’s gone, it’s gone. If a child wants something but doesn’t have the money for it, the parent should not buy it. Children should have to work and save and sacrifice until they have sufficient to buy what they want" (Hill & Sudweeks, pg 192).
In the pamphlet, One for the Money it says, "Based upon appropriate teaching and individual experience, children should be responsible for the financial decisions affecting their own money and suffer the consequences of unwise spending."
So my husband and I decided we needed to put this into practice. With so many families in grinding debt, it is a safety net for our children to teach them now. When they go to college they are goin go bombarded by free credit card offers that gloss over the reality of paying back what you spend with interest. I want to help my children avoid unnecessary debt before they leave my home. Prepare them for the real world if you will.
We found a free budget sheet we printed off for them. We used the one in the back of the One for the Money Pamphlet. It's free and easy to use. Then we discussed with our children what they need to pay first, tithing. What do they pay second? 10-20% into savings. The rest you can spend on needs then wants. We also discussed that living at home, their budget looks a lot different. But as they leave there will be items they have to add, utilities, groceries, housing, internet, etc. My teenage son has to budget money for gas because he will be able to get his drivers license in a few weeks. They have to budget for clothing, sports, taking care of their dogs. Honestly, they didn't love it. But I am determined to teach my children this. I have seen too many people spend money they don't have and the pressure it puts on them. Eventually we want to help them invest so they can get a leg up in life for retirement, but that will come later. For now, we are focusing on using their money wisely.
"Effective parents provide real-world experiences with money and financial institutions. It is important that parents teach children to deal with real financial institutions outside of the home" (Hill & Sudweeks, pg 194). Thats what my goal is with their budget. I want to give them real experience without me telling them what to do with the money. So I made a plan. I am going to start doing something a little scary to me. I am giving my kids a budget to purchase everything they need for school. That includes supplies, shoes, clothing, school fees, etc. I will take them to the stores and let them do it. I plan to tell them the cheapest places to purchase supplies and to look for the non name brand because it's always cheaper. Because after they buy supplies and pay school fees, what ever is left is used for clothing and shoes. So being frugal at the beginning is important. I'll let you know how that goes in August of 2021.
Ashton, M., (1992). One for the Money: Guide to Family Finance. [Brochure]. https://www.churchofjesuschrist.org/bc/content/shared/content/english/pdf/language-materials/33293_eng.pdf
Hill, E., & Sudweeks, B. (2018). Fundamentals of Family Finances: Living Joyfully Within Your Means. Brigham Young University Academic Publishing.
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