“Budgeting”, as you have pronounced it many a times and realized, it is too heavy as a word to be understood by a young mind. The layman definition of the word would be to create a plan or a blueprint on how you can spend your money and save some of it, so you know where each penny went or you will be left wondering at the end of the month. Now the question arises that what it is, that is so important about budgeting that we should understand at an early age of our life and what will be the domino effect if we don’t?
As we know that every parent wants, that their children become successful in life, so, they teach them the moral and social values related to life. But are those enough, well the answer is “No”. Because we live in a competitive world now, and here, it’s not enough that you simply exist, you need to thrive. We live in a moral world, but still a person should know the economic obligations and consequences of their life. It would make it easier for them to value money, when they enter the real-world to earn the respect through money. Many economists believe that in future, everyone should know and have control over their expenditure to meet their saving goals, that’s where budgeting steps in.
Being open to the vibrant world of money, does have its advantages. It creates a sense of individualism in children, and also helps them to take thoughtful spending decisions. It establishes a foundation of good monetary habits for future. The knowledge of financial matters provides them the confidence to solve any monetary problem, if any arises at home. But, as we know the core or the end goal of budgeting is to save by making good spending decisions, it’s still a thin line to walk on. Saving money is not an easy task, specially at a very young age because we often give it up to our impulsive mindset (like buying a particular game or a dress that we don’t needed) and make decisions that we regret at the end of the day. That’s when we should understand the difference between a need and a want. We agree or not but for us the first eye catching attraction is the last verdict, that’s the mindset we need to change.
Well, you must be thinking that why not schools take the initiative and teach this to the young minds. But, hold your horses there, schools can teach them about economics for future not how to manage their finances at such a young age. There is a difference between making them understand and when they actually understand the importance of something, that gap can be filled only by a parent or someone close by. Like for starters, we have to make them stick to the fundamentals till it becomes a habit. Then comes saving, and giving up the temptation to spend it on something useless. After that it is a cycle that goes by on its own, you can invest the money or use it when you actually need it and so on. The thumb rule that remains is, the more we spend now on wants the less we have for our need that may arise in the future.
Now, you may wonder, what may be those ways in which we can make the youngsters understand the importance of budgeting. Well, for first, as we know that parents are the role models for their children, if parents spend carefully, this habit may easily brush off on their children as well. Second, they can make them understand the importance of money, by giving them money for the work they have done, it’s not necessary the work has to be some official work, it can be a household task also to start with. We can also teach them the good habits by giving them the opportunity to do so, like giving them the budget for shopping or while buying something of importance. In this way, they will feel responsible for the task given to them and will learn from the experience. It would also be a great move, if we will make them the part of the budget planning commission of the family (sounds official right?), where the members are usually parents or elders. This kind of move can teach them, how to lessen on expenses which is a crucial part of the budgeting process.
Also, we can do a little exercise, we can give them a small amount to spend and tell them that with this you can buy two things but you have to buy only one of them. This gives them a choice wrapped up in the blanket of responsibility. Also, there is a gender biased rule in who is better at managing their budget? Well, you must have noticed that girls are better at constructing and following budgets compared to boys, the reason for that is, girls are involved more in household matters compared to boys. When teaching children about this, the simple mistake people do is that they try to stop kids from spending which is ill-advised, they should explain the concepts to them and the rest will follow.
Many people still think that money matters are for grown-ups, which was the case but at least a decade ago. Now people realize that being economically informed about matters is a part of the process of growing up. Many schemes like children’s saving account or small fixed deposit accounts owned and managed by children are not so unrealistic now. Also, this motivates them to stand on their own feet by starting early like going for a part-time job or something other than that which gives them an alternative source of income other than their parents. Budgeting plays a significant role in ours and our children lives, so, it’s better to plan now and have control over your resources in future.
By Aniket Singh