Your 7-Year-Old Child’s Budget
If a 7-year-old has a great child’s budget, will that make him a frugal adult? It may, and it may not. But, we do have lots of evidence to suggest that spoiled children often become over spending and greedy adults. What happens at 7 could easily happen at 70, since good and bad habits grow over time, so why not start growing good habits with a child’s budget early.
Psychologist say the earlier you teach someone a skill the better chance they will perfect it overtime. That is seen in teaching skills such as music, sports and education. In my humble opinion, that also works with budgeting skills.
Some folks can’t figure out why their kids constantly beg for everything in sight, then they look back at the fact that they did not set proper limits on spending early. They felt that a happy child was a child that had everything they wanted, until of course, the child hit their teens and then twenties, and their begging for “things” and spending money developed into out of control behavior.
Here are 3 things you can do to put your 7-year-old on the right path for life.
- Give him an allowance, a piggy bank and chores to begin his child’s budget
Some parents think children should not be paid for the chores they do around the house. I am of the camp that feels there is nothing wrong with giving a child an allowance for working around the house if it is in line with age and chores.
The child does their chores on a schedule, they are paid on a schedule and they are encouraged to save a portion of their allowance and budget the remainder. It teaches them early that we all must work for money, and money has a limit.
- Discuss value, which is the pinnacle of a child’s budget
Some products appear cheap, but they will not last after the first usage or wash. So, teach them there is a difference between expensive, cheap and value for a product. You can purchase a product that appears cheap, but has very low value because it is made with low quality materials or craftsmanship, and quickly falls apart and becomes useless.
An example is buying a computer that is very inexpensive but it only last for 3 years, versus paying slightly more, say 30% more for a computer that last for 12 years — the savings is obvious. On the other hand, you can purchase an extremely expensive car, the upkeep is extremely expensive, and the breakdowns are frequent. That car may look good and go fast, but has little value for practical use and longevity. The maintenance cost out way the looks and performance.
- Teach your child about budgeting, savings and costs to round out your child’s budget
The earlier a child understands what a budget is, how to budget out the total sum of the money they receive, and how cost effects their savings, the better they will be in the future.
Sit down and decide with your child what is important for them, you can look at the internet or newspapers and find the prices of items they are interested in. Inform them that prices change from time to time, but this will give them an idea of what they must save. Allow them to set short term savings goals – a sports item like a basketball or doll, and a long-term savings goal like a more expensive game.
When you buy their more expensive items like bicycles, ATF’s, computers, and clothes, use this time to also discuss value, longevity, and cost.
Using steps 1,2, and 3 will allow your child to start early to process a functional child’s budget, so they can take budgeting into their adult life as an expert.
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This is great and extremely important! Love it!
Thank you, there are many other articles to increase your financial knowledge.
Glad you enjoyed it. The earlier you start with kids, the better they will be with money as time goes on.
Great minds think alike! I’ve written about this on my blog too! In fact, I think unless your children were born with gold spoons in their mouths, they should be taught smart money management from as early as they can manage it. Thanks for this.
It is not all about the money. There are many people who inherited large sums of money as children and adults, only to end up poor from lack of common sense and knowledge about budgeting and finance.
Paying them for chores is an effective way, I think. Cuz when I was in my teenage years or younger. I do the dishes in exchange of snacks. Lolz.
That is a good idea, allowance tells them that thy will get paid in the future for work not laziness.
We have a 4-year-old and since she receives goodies and travel opportunities through our website, sometimes it is hard to make sure she understands the value of money.
This is a fantastic idea. It’s so important to teach the kids how to manage their money. The younger the better, too. They really soak up knowledge at that age.
I feel lucky that my parents instilled this money knowledge in me at a young age. So important to teach this to young ones!
Money management gets easier as you get older.
Very well written and not something I’ve ever thought about before.
Thanks.
My teen son is already earning and I’m definitely teaching him how to budget. He’s learning. 🙂
It is most important for teenagers, so they know that money does not grow on trees.
People really don’t take things like that into account when they are raising their kids. This is a really great idea to help them out.
Thanks Kita. Most realize the importance when it is too late and the kids have been spoiled.
Teaching them young how to handle money is so important. We have chores and use a debit card system specifically for kids.
Love that system. They will understand debit cards in the future.
I love this. I’m always talking to my kids about the importance of saving money.
That’s great because it starts early.
It’s so important to teach them at a young age. I’m always giving my nieces and nephews budgeting advice.
I am so agree to start growing good financial habits. Love these hacks and I should follow them!
I typically never bought my kids everything they wanted all the time. Money has been kinda limited for me most of my life, except for a portion of my previous marriage. But even then I used my frugal lifestyle to do what I could to save money. I’m thankful that I grew up to be financially savvy. My older two kids get it. I’ve got to work on my youngest a bit more.