When you think of kids and budgets, the words seem really incompatible. I always would say that, if I had any money on me, the kids could smell it and they would come to me saying, “Dad I need…” It seemed they knew exactly how much money I had. While this may be a slight exaggeration, anyone with children, especially teenage children, knows exactly what I mean.All joking aside, children need to learn the crucial skill of creating and following a budget. Children look up to and learn from their parents. They are always watching us and soaking up everything we do, even our habits that are bad. I would have loved to be able to give my kids everything – which made it difficult for me to say “no” to them. I realized it was more important to teach them to manage money, to budget themselves, and to learn to be patient. People expect gratification right away. When we see something we want, we use credit cards to purchase it immediately, not worrying about future payment. If we do this for our children, buying them the things they want with no effort or waiting on their part, we are teaching them that this way of life is acceptable and even the “norm.” Once our kids are away at college or out on their own for the first time, if they follow the “need it right now” mind set, they can easily go deeply into debt very quickly.

The first time I had to teach budgeting was when my oldest daughter, who was in middle school at the time, started wanting brand name items which were outside of our normal budget. Sometimes when she got the brand name items, she would use them only a few times before they were tossed aside in favor of the next trend on the horizon. I gave my daughter a monthly allowance, so I began telling her that I would pay for half of the item and she had to pay the rest. Having to pay for half of each purchase with her own money reduced the number of her requests. Suddenly, some items were not as important as they were before and the items actually bought were used more often. We noticed as well that, by waiting for some items, the trends would change and prices would go down. We also taught her the value of saving by encouraging her to save at least fifty percent of her income.

Most importantly and lastly, we discussed debt, budgets, and credit cards before she left for college. Many kids are targeted by credit card companies as soon as they start college, so they must have an understanding of debt. The best gift we, as parents, can give our children is the right tools to make the right decisions in life.