05 June 2013

25 Strategies to Stretch Your Money No. 16 - Teaching the Kids how Your Spending Plan Works

Saving money and using the money saving tips here on my blog and in the Cheapskates Club Tip Store will be so much easier if you have your whole family on board, supporting the effort together. After all, these are good money lessons to teach children of all ages.

You can start by involving the whole family in managing family money. Let the children know that the light and power they use each day costs money. Show them the bill and, if they are very young, show them just how much that bill costs in cash. Young children are quite literal so showing them how much you earn each week and then how much of that money goes on the basics like power, water, phone, food, petrol, sports fees etc. will help them to understand just how much it costs to run your home.

A fun and memorable way to teach young children (and even a few teens) just how much things cost and how long it takes to earn the money to pay for them is to show them. It may seem odd, but next pay day go to the bank and withdraw your entire pay in $1 coins (you may need to pre-arrange the coins with the bank). 

When you get home, sit down with the kids (and your partner if needs be) and make piles for every category on your Spending Plan: rent/mortgage, groceries, petrol, sports fees, tuckshop, bus fares, electricity, gas, phone, Internet etc. with "fun" being the last pile.  Then tell them how long you have to work to earn the money to pay for each pile i.e. you earn $10 an hour and your grocery bill is $80 - you have to work 8 hours just to pay for the food they eat.

Then explain what happens if you over-spend in one category - there won't be enough dollar coins for the other categories. What will happen? One category will have to go without, meaning the bill can't be paid. Or you will have to work longer to earn the extra money, meaning you won't be able to spend as much time with them. Or someone will have to give up something they enjoy and put those dollars towards the short pile. 

Seeing the size of the piles and knowing how long you have to work to pay for just one pile will show everyone just how important it is to stick to the Spending Plan. 

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