When you think of things that bring your family closer, you probably recall activities like eating out together, diving into your swimming pool, and going on vacation.

Believe it or not, there’s also great bonding potential in exploring how your family is able to pay for such perks. Whatever your kids’ age, it’s never too early or too late to broach the topic of budgeting. For more specifics, check out this age-by-age guide to money management for kids.

Family Budgeting Starts With Keeping It Real

Financial realities exist for your children, whether or not you choose to address them.

Your third grader is already making decisions like how to spend their birthday money. Your teen likely worries about the cost of their extracurricular activities and may be considering getting a job to pay for luxuries like concert tickets.

Teaching your kids about budgeting sets a healthy precedent where dealing with finances is about problem-solving, not anxiety.

Family Budgeting Starts With The Basics

Start by sharing some basic facts:

  • Money is earned through hard work
  • Resources are finite
  • How you spend your resources is a matter of choice
  • The way you spend, and save, can affect your quality of life

You can then introduce concepts like the difference between gross and net income. Consider showing your kids a paycheck, enumerating the hours you’ve worked and deductions for taxes, health insurance and savings. You may wish your paycheck was bigger, but a modestly-paid parent can still be their child’s hero. Ditch the shame and instead acknowledge the dignity of earning an honest living.

Discuss the psychology of spending, too. Talk about how commercials target kids and the virtue of deferred gratification—saving for something special—over impulse buys.

Breaking Down Your Family Budget

Next, it’s time to talk about family expenses. Rent, gas, preschool, utilities, milk and toilet paper are your household’s inelastic demands. Discretionary spending is when you buy things you want but don’t need, at least not now.

It can be sobering to acknowledge how little discretionary money is left after attending to life’s demands, but it supports that all-important lesson: “Money doesn’t grow on trees.”

Discretionary spending is where you can make the most choices.

There’s a time to act on impulse, taking the family out to the movies, but there’s also a time to consider long-term savings. You can head to your favorite pizzeria for a tasty meal or, for the same price, buy ingredients to make many homemade pizzas. This is the kind of decision you can hash out with your kids.

Making Allowances In Teaching Budgeting

An allowance is a great way to teach children about priorities. It gets young people asking the kind of questions you pose to yourself, on a microcosmic scale: “Do I blow my allowance on candy or save up for something more meaningful?” For a frugal youngster, even a couple dollars a week can add up.

I base the amount of my kids’ allowances on their age, and tie them to chores like doing dishes or picking up “dog-doo” in the yard.

Family Budgeting Can Be A Saving Grace

Even if you live from paycheck to paycheck, try to model savings habits for your children. Show them you value planning for the future, making payday a chance to deposit a small amount in a savings account for college, retirement or a family cruise.

You can also emphasize the importance of giving, whether you contribute to your church or a local charity. In our household, we make a point of giving an annual Christmas present, in the form of a modest donation, to a local no-kill animal shelter.

Family Budgeting Is About Striking A Balance

Getting children involved in family budgeting is about striking a balance. Kids should be free of financial worry, so share your struggles sparingly. Money may be tight, but you don’t want your kid worrying about whether you’ll make the mortgage payment.

Family Budgeting Can Mix Work With Play

There are many ways parents can make learning about money enjoyable:

  • Play money-oriented games. You may be using funny-money but while you play Monopoly your family’s learning about capital, real estate and the “luck of the draw.”
  • Institute a spare-change jar. Have everyone contribute change with a goal in mind, like a visit to a local mountain-climbing gym. Your kids will enjoy seeing the money add up, and get a kick out of turning it into cash through a system like CoinStar.
  • Let children handle money and make choices. If you’re picking up a few necessities at the supermarket, hand your child a list and some money. Have them select what you need, adding up the cost of the items, and then let them pay the cashier. It’s good for their math skills and sense of self-reliance.

With some effort, money management can be a family adventure leading to money-management skills that will last a lifetime.

Author's Bio: 

Kevin Jones has mastered a busy lifestyle with work and fitness combined with family life. He writes offering solutions for personal fitness and time management as well as keeping families fit together by utilizing activities and diet.