about 1/3 of Americans maintain a household budget
. While you may not be one to budget, it's still imperative to teach your children and teenagers about it so they can have a level of financial literacy. Teaching kids how to budget now can help them form good habits and beliefs about finances and ultimately make them financially responsible adults.
While you can send over articles like "How to Set a Budget
" to your children and hope that it sticks, the best way to teach them about budgeting is to have them be more involved with managing their finances. How many times does your kid get a monetary gift for a holiday or their birthday and the money finds itself in a drawer until it's ultimately spent? Instead, take the opportunity to teach them how to manage that money effectively and put it safely in an account for them. Sikorsky Credit Union has a savings account specifically for people under the age of 25 to save. The Early Advantage Account
helps younger members save by giving them a high rate of return on their deposit. Setting your kid or teen up with an Early Advantage Account can also help to curb impulse buys.
The best way to teach about budgeting is to sit down with your kid and work with them to come up with a plan for their money. Follow these steps to help them implement saving.
1. Figure out how much they earn each month.
If your child's only income is monetary gifts, it may be best to split the money in half and have half go to their new savings account and the rest for their spending money. However, if your kid or teen also has a part-time job or is given a monthly allowance, sit with them and average out the total amount they make per month.
2. Talk about how much spending money is needed
per month for their expenses and fun money. For most teenagers, it might mean money for gas, new clothes, and entertainment. Take this number and subtract it from their monthly income.
3. See what money is left
and have them put it in their new savings account. This method can rapidly build up their savings for their future.
Doing this exercise with your kids can help them spend differently, and they may even learn that they enjoy saving money. For more information about Sikorsky Credit Union’s Early Advantage Account, please go to www.sikorskycu.com/early
Invested Wallet. (2019). 21 Eye-Popping Personal Finance Statistics About Saving Money & Debt. [online] Available at: https://investedwallet.com/personal-finance-statistics/ [Accessed 6 May 2019].
Parenttoolkit.com. (2019). 5 key budgeting basics for teens. [online] Available at: https://www.parenttoolkit.com/financial-literacy/advice/saving-and-spending/teaching-teens-to-budget [Accessed 6 May 2019].
Budgeting is a great way to keep track of your finances and ensure that you're regularly putting money in savings accounts. However, you may be surprised to know that only