Budgeting

Making sense of Money, Allowance and

Wants

Teaching a Budget

• The Importance of Budgeting and having an allowance

• We as parents have about a million things to think about with our children, soccer, Church activities, meetings, baseball, sisters and brothers, tennis, yardwork, music lessons and did we ever think of dinner, cleaning the house and breaking up the arguments for the 100th time? And that is just in the 1st 2 hours after school! OY VEY

Teaching a budget When?

• My only free time is between 2 and 5 am!

Lets start with the simplist reason • Children are not born with the “saving money”

gene, nor are they born with the “spending money” either. We instill these values, good or bad, into children. We can also “uninstill” these habits. Though it takes a lot more work to break the negative behavior.

• When your child wants to buy a candy bar at the store who pays for it?

• When your child wants to go to the movies who pays for it?

• Why? Simple, it is easier for us, the parents, to pay for the treat than to go over the simple budgeting rules we have created for the child.

Why are we so afraid to say No?

• As parents we don’t want to have to say no to our children. Plain and simple.

• All of us, our parents and our children have lived through the testing 2’s and have come out alive!

• We lived through people telling us NO.• No, don’t vacuum up the cat, No don’t pull your brothers

hair. No, get that bug out of your mouth.• No, don’t put toys in the toilet and flush. • Yes, Fire is Pretty, no don’t play in the fireplace! • No, don’t run out in front of cars!

An easy learning method

• When my kids were little I started teaching money management with a simple method I learned from a 2nd parent.

• First: all work was valued and required payment of some type.

• Second: family work, still valued, paid out a little differently.

• Third all money went into the “3 envelope system

My kids are older how do I change the habits they have now?

• Again not hard, but consistency is a must and must always be reinforced.

• I raised 8 foster daughters while I was in college and found that the old teen can learn new tricks.

• Was it easy? NO!!! But this is where consistency played a huge role.

• Did the girls try and wear me down? You bet!

Family jobs

• Chores are Chores, it doesn’t matter if they are mowing the lawn, doing laundry, washing the dog, or vacuuming. All jobs have value and as such they should have a value price put on them.

Putting Value on a Chore• In my house we took into account a few

things:• 1) How long does it take?• 2) How heavy is the job?• 3) Does the job require cleaners? (Chemicals)• 4) Is it done in the heat of the day?• 5) Is the chore for my benefit or the whole

families benefit?• 6) Age of the child.

Using Stars or Money

• Make sure whatever value you put on a job you keep it the same, with the same expectations for everyone. If you use a star chart, make sure all stars have the same monitory value.

• In my home each star was $.50• Don’t go crazy with value because at the end of the

week they may end up earning $500.00 a week for simple jobs. Make it difficult, but obtainable! Don’t over value, or undervalue the job. For the sake of learning budgeting, BE REALISTIC!

Putting value on a job.How long does it take?

• 1 Star Jobs were jobs were based on time and how much effort was involved such as:

• Loading/unloading the dishwasher• Emptying all the trashcans into the big trash• Setting the table/Clearing the table• Folding Laundry• Cleaning the cat box• Cleaning up the dog feces

Jobs: Level 2Using equipment or chemicals just as a custodian

would do.

• Heavier jobs required using equipment and chemicals.

• 1) Cleaning the bathroom (2 stars per bathroom).• 2) Vacuuming the entire house.• 3) Dusting with chemicals to make things shine.• 4) Hand washing dishes/drying and putting away.

Jobs: Level 3Earning 3 stars

• These jobs were usually more strenuous and usually needed supervision.

• 1) Mowing the lawn.• 2) Snow removal.• 3) Yard work.• 4) Washing cars, more than 1.• 5) Cooking a meal.

Jobs Level 4

• These jobs paid totally different. These are jobs that would normally be paid to have some help.

• 1) Cleaning out the garage.• 2) Helping cutting down tree branches.• 3) Painting or scraping a room or outdoor

section of the house.• Any job that requires more time, patience,

assistance and teamwork than other level jobs.

Keeping expectations the same.

• No matter what the age of the child the value needs to be at their level.

• For example: A 4 year old may not be able to run a vacuum, but can pick up everything off the floor so the room can be vacuumed and receive the same amount of stars after the job when all objects are put away. They are just as vital as the vacuumer.

Monitoring their Chores and Pay Days

• Give each child a check book (make one up on the computer) and when they finish their work week pick a day and have a sit down meeting with the entire family. Teach them to enter their stars as money into the check registry. This way they can see what they have earned and keep track of it.

• Paper and coins get lost, stolen or spent too easy!• Make this a family event so they all have an idea of

where their money comes from and also where it goes.

Give each child a planner to mark upcoming events

This way they can start learning to think ahead and plan on what and

how they want to spend their money.

Spending

• Earlier I mentioned the “3 Little Envelopes”. I was taught this system and it is a good method for all ages.

• Take 3 envelopes and mark them as follows:• Envelop 1: Savings• Envelop 2: Spending• Envelop 3: Tithing/Emergencies• Not all families have Tithing so emergencies is

another way to hold for either an emergency or higher costing item.

Breakdown

• Take all the cash the child earns and divide it into the 3 sections and equally place the funds into each envelope.

• Take the savings envelop and put in away in a hiding place where it cannot be touched.

• The spending envelop is for treats, movies, buying part, or all, or a birthday gift for a friend, or just something special.

• The final envelop goes to what it is expected to be used for; whether that be Tithing or an emergency. All emergency funds needs to be discussed as a family and not the decision of the child. Their idea of an emergency may vastly differ than that of an adults, who hopefully has a little more reasoning power.

Another way to teach adult budgeting to our pre-teens and teens.

• In the Functional Skills School-to-Work program here at Spectrum we have a “Living on my own” project that all seniors, and post seniors must complete.

• Each student is given an IKEA catalog and a budget of $1500.00 to completely furnish a 1 bedroom apartment for them to live in.

• HELP FIND THE IKEA CATALOG LOGO FOR HERE

Make a floor plan and a list

• Have your child make a floor plan of what they think the apartment will look like.

• Go through the catalog and “wishful” shop on the items they need for their apartment.

• Add up the furnishings and see how far out of budget they are.

• Start over finding less expensive items that will serve the same purpose. It is a “want, need, or desire” item. What is the priority of the item. Can I live with a hand style can opener or do I have to have the fancy electric one?

Keep going!

• This list will have to be adjusted so many times the child will finally be happy with the broken down couch they saw at the thrift store! But don’t stop for the sake of frustration. Keep searching until all is within budget. We are teaching perseverance and learning to live by Albert Einstein's saying:

• I haven’t failed, I’ve just found 10,000 ways that don’t work!

Reality costs• Sit down and go over your home bills with your

children. When my son was 11 he couldn’t understand why money was so tight and I just couldn’t buy him whatever he wanted the moment he wanted it. So I gave him the family checkbook, bills and grocery list. Boy was he happy! He had all the family money!

What Happened• That extremely happy 11-year –old quickly

became 1 unhappy person!

What does it cost to live• Taking the time to teach your child that

money doesn’t grow on trees is the best lesson you can teach them in todays world. It takes time, patience and consistency!

Don’t be afraid to fail• There are times you will think, “Why am

I doing this?, just give her/him the money and I won’t have to listen to the whining!

Remember this, Budgeting is hard and we all need to learn it, Somehow

• If you can remember you learned to get through the crying nights, not giving into every whim, ignoring the tantrums you can also get through the budgeting lessons.

• Children love to be in charge, don’t be afraid to make them in charge of the family budget for 60 days. Sit with them and go over your bills.

• Be honest as to why you can’t buy them $150.00 shoes.• Talk to them and tell them why, not just the standard “I

can’t afford it” saying. Give them the reasons and again, have the family budget meetings. Let them know you and the entire family lives on a budget.

You, Family and Food

• Have your child plan, shop and cook an entire meal 1 night a week.

• Keep grocery receipts for 1 month and divide the bill by the number of people in the house to help your child understand just what it will cost to eat real food monthly.

• Have your child keep a small diary of what they spend on Everything. When I was a baby my mom and dad had a huge argument over money and as revenge my mom kept a diary of every penny spent. Her $3.00 a week was completely accounted for! Dad never complained again since he always kept his boat tips!

Success

• This is now in your hands, Teach your children well.