Personal budgeting lessons for young children
A lot of children and young adults indulge in taking personal loans and home mortgage loans. In this competitive world every young child needs to have lessons regarding personal budgeting so that they can manage their budget without facing any difficulty. They get to know about this by watching and listening to people around them like parents, friends, relatives etc.
At the age of 3 children observe that their caretakers are trying to tell the reasons to creditors for not paying the amount this month and these conversations form perceptions. At the age of 10 a child is capable of taking decisions on the basis of perceptions he forms when he was younger. Later on, as he or she becomes older and starts taking decisions, he is likely to emulate what he saw. So you need to give lessons to your child related to personal budgeting skills and facilitate financial freedom in their life.
Consider your purchases:
These lessons can be incorporated through your Saturday activity or home school program. It can be made possible by sitting together with your child and working out a plan. These lessons can be taught by representing the concept through actions and daily practice.
If the child is old enough, the family needs to discover the items which are considered to be the next purchase such as, a television, a refrigerator, a bike, a washing machine, a house and so on. If the child is very young, he or she needs to choose items such as toys, pencils, a cycle etc. The child should be given a notebook only for financial management projects. He or she should then write down the plan. The next step should be to discuss among your family members, how the child will save money for the purchase and decide where the money will come from. It should come from the grocery money, entertainment budget and other such allocated amount. Also talk about the problem being faced by removal of funds from each budget.
You need to find the total cost of that item and how much time it would take to save money from different budgets. You need to list at least one characteristic of the item you are willing to buy. If it is an appliance, talk about characteristics you require and tick the ones which are elective. If the item is a toy, the child should tell you the color he wants, how he will play with that toy and what the toy will do. Then write down a plan to decide which style of the item will best suit your family. Check the place you will explore to find your style of the item. Weigh your options of purchase such as a catalog in a store, television, in a sales paper or on the internet.
In the end, talk about the necessity of the item also and decide whether it should be purchased right now. If so, how it will affect your other budgets? While answering these questions, the child should identify the actual need for the item. This will help him to differentiate things that are necessary from things that can wait for a while.
Financial freedom from debt:
The initial stage of this lesson plan will help your child learn vital aspects in order to negotiate personal debt and home mortgage loans. It will also help reduce home mortgages and make strong financial decisions in future.