Kids and Budgets.

My 2 youngest kids were always on a budget of some sort. They received an allowance and from that allowance they had to give 10% and save 10%. They then had 80% to keep and spend.

As they grew older, and had more complex items to spend their money on, this simple equation changed. (explained below).

When Nicole was about 9 or 10 my husband lost his job. We had enough money to live on for 9 months (thanks to our Emergency Fund) but not a lot of extra. We tried to find a solution that would help us keep tabs on spending but also allow Nicole to have the freedom she needed to spend.

And, as you know, kids are just mini adults. They see things and they want it…just like we do. The difficulty for them is that they are at the mercy of someone giving them cash. Either from mom or dad, birthdays, Christmas or some other ‘cash giving' event. Which is why they received an allowance from us.

We also used the allowance as an opportunity to teach our kids about money.

The allowance eliminated all of the no's.

My husband and I no longer had to be the bad guys and say no all the time. The decisions was theirs. If they spent ALL of their money on a candy bar…then they could not buy that lego set they were saving up for.

And Nicole was no different. She wanted key chains. Makeup. Clothes. She wanted to go to the movies with her friends. And as she got older…she had Cross Country running shoes to buy. Handbags. Dressy shoes. ALL the things that girls love.

At the age of 10 she received $25 a month in allowance. I know that might sound like a lot but it really was not. From that $25 – $2.50 went into giving, $2.50 went into savings, and the rest was hers BUT…it too was broken into categories.

She had:

• Short term savings
• Long term savings
• Money to spend

Now, unfortunately, I don't remember the exact percentages (we always spend on percentages). The examples below are pretty close.

Let's start with the $25.

• Giving – 10% or $2.50. To our church every month.
• Saving – 10% or $2.50. Into a savings account. This was for a car, college or something really big and long term.
• Short term savings – 20% or $5.00. This was savings for something bigger that could not be covered by a month's allowance. Maybe a book or fancy key chain.
  • She would decide what she wanted, write it down, and keep track of her savings. Once she had the money she could buy her item…or change her mind. But we always discussed the new item to make sure it was not just a whim.
• Long term savings – 20% or $5.00. This was savings for something bigger. Something for her room. Or maybe nothing at all. It was set aside and was there when she knew what she wanted.
• Spend the rest – 40% or $10.00. This was her NO QUESTIONS asked money. If she wanted to blow it on snacks at Walmart she could. But, if she did, when her friends called and said can you go to the movies…she had to say no.

Isn't this how we are supposed to budget our money?

Everything that was set up for Nicole is everything we, as adults, need to be doing. We need to save. Plan ahead. Learn how to say no. ‘Kids and Budgets' is something we all need to be doing, right?

As Nicole got older, and as we had more money, we increased her allowance to $80 a month. The percentages stayed the same (the beauty of percentage living). She now had to buy all her own clothes including her workout clothes, running shoes, movies and going out with her friends.

ALL of those things that a 16 year old girl needs and wants.

Cash envelopes.

We set up the cash envelope system for both of our kids. And, because they were still living under our roof and we were supporting them, they had to account for their spending monthly. We would look at each envelope and make sure that the balance was as it should be. We did not want anyone ‘dipping into the till while no one was looking.'

Accountability is HUGE when it comes to budgeting!

Nicole is now 28…what is happening now?

Well, one thing about Nicole is that she does NOT like spending money. She likes to save it. She and her husband budget on percentages. They live on ONE income and budget accordingly.

She is a GREAT budgeter. Her husband appreciates the fact that she is not into designer anything. As a result, he does not need to keep her in Gucci bags and designer clothes.

Kids and Budgets.

There is so much that goes into kids and budgets. I have some great blog posts for you to read. There are 3 just devoted to Kids and Allowance.

I would like to encourage you to teach your kids about money. If you don't, someone else will. And, as you teach them, maybe you will learn a thing about budgets yourself. I know I did!

Go on! You can do it!

• What is the Purpose of a Budget?
• Benefits of Budgeting
• What is an Emergency Fund?
• Teaching Money to Kids.
• 10 Tips to Manage Your Household Budget
• How to Pay Off Credit Card Debt Fast
• ALL Budgets & Money

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