Saturday, June 11, 2016

Teach Kids How To Tell Dollars Where To Go

Today’s fantastic family finance article is:

Pointing the Way For Money

Roger Babson, the entrepreneur and economist who founded Babson College in 1919, once quipped:

“More people should learn to tell their dollars where to go instead of asking them where they went.”


So, how do people tell their dollars where to go? With a budget.

Give your kids an early taste of budgeting with this simple recipe:

  1. Pick one category. Choose something you’re currently paying for that your kid really cares about. Clothing? School lunches? Entertainment?
  2. Negotiate the amount. Let your kid do the math first. Then, bargain a bit to tighten things up. Are designer jeans really necessary? Swap in the discount ones.
  3. Set light boundaries. Identify any purchases that are strictly off limits, but allow as much freedom as you can.
  4. Hand it over. It’s crucial for your child to own the funds, the decisions, and the consequences.

Remind your kid: when it’s gone, it’s gone. That’s the learning part.

And what if the budgeted dollars disappear early? At least they know where they went! That’s progress.

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