Financial Learning for Kids Series - Budgeting for Children

 

Budgeting for Children

Money Management is one of the important qualities of a successful person. “Do not save what is left after spending, but spend what is left after saving,” said Warren Buffet, the second wealthiest person in the United States. Whether you earn more or you earn less, you should be able to plan your money effectively and to spend according to your plan. That is called as Budget.  

Being young now, if saving money becomes part of your activities, saving for the future is likely to become a habit. Early financial education can be the first step on the road to being better Money Managers when you are grown up. Hence, in today’s article I’m going to introduce a budgeting tool for you kids.

The tool I’m going to talk about is not something new to you, it’s the first bank of every child – The Piggy Bank. But it’s not just having a piggy bank and putting all your money to it for a while and then you would always have an urge to open it / use it when you are in need of something. Once the piggy bank is empty, then we gradually lose our interest in continuing to collect money in our Piggy Banks.  Hence, let me tell you, how the Piggy Banks can be used effectively as a Budgeting tool.

Each of you take 3 Piggy Banks for yourself. Every time you get money as a present or a reward, divide that money into 3 parts. For e.g: I always apportion my rewards into 50%, 35% and 15%.

50% of my money goes into

Spending Piggy Bank

(This is the fund that you get to spend as soon as you want to buy something / gift someone / pocket money expenses)

35% of my money goes into

Savings Piggy Bank

(This is the fund you want to save for a long term or to buy a more expensive item by yourself. You can stick your goal / draw a picture of your dream item that you are saving this money for)

15% of my money goes into

Giving Piggy Bank

(This is the fund you want to donate or spend for charity to the needy children near your home/school etc., Always remember “When you give more to others, God will make sure you get more from him”)

 

With this tool, you will learn to plan your money for the goals you have set up.  Before asking for something from your parents, you know how much of an effort and time it takes for you to earn/save that money. These little changes in your lifestyle are bound to help you become more financially responsible individuals and make financially sound choices later in your lives.

With Love,

Aparna Nayakam