Should young people be required by parents to have a budget and stick to it?
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There are many different ideas about this and they depend to some extent on what you mean by "young people."
If you are talking about high school students, I would argue that parents should specify what things they will pay for and then give their kids a set amount of money to use on all other things. I do not think that the parents should require their kids to have a formal budget where they set out how much they will spend on which things.
I believe in letting kids learn things for themselves. I think that the more freedom you give kids (within some limits) the better they will do when they are completely away from their parents. Therefore, I think that parents should treat kids like adults in this way. They should tell the kids how much money they will get each week or month and then let the kids decide what to do with it.
If the kids squander the money, that will help them learn for themselves about the need for budgets. Parents might help them think about the process, but should not impose one on them.
But how are kids supposed to learn budgeting if they aren't taught how to set out a formal budget. They spend until it's almost gone? Pohnpei makes some good points, but if, as a parent, you're going to do this, you must teach your kids how to set up a formal budget. They need to know how to plan for how much gas they'll use, or how much entertainment money they can have. A formal budget makes this possible.
Parental awareness of your children and their behavioral patterns needs to come into play as decisions and procedures are being decided. If a child's personality is such that s/he will learn from experience and will change spending philosophies in response to running short of money a few times, the parent(s) may be able to provide financing and allow the learning process to play out.
Other children need direct instruction and guidance in order to organize and understand the procedures involved in planning and following a budget. Neither way is "right" or "wrong" - they are recognizing that children are different and have different learning styles and needs, in money management as in all other aspects of life.
I think that as children become high school age you should start working with them on what a budget is and how to go about setting up a monthly budget. Once they leave high school and go to work or attend college they need to have some experience with money handling and how to live within their means.
In regards to advising their children to save, parents should help them learn at an early age what is a good percentage to save. While some would frown upon this, my parents taught me to save 10% of everything I took in (from allowance to cash gifts and later to income earnings). I began it at such a young age, that it became a good habit that I've kept up. While a formal budget might seem rather restrictive, I think that if parents model budgeting themselves, their children will be much more receptive to the idea of budgeting their money.
Definitely! I wouldn't introduce a budget until around High school, but children should be taught the value of money from a very young age, starting with their allowance. As they get older, I wouldn't have a strict budget in place or anything written in stone like that, but they will need to know about income coming in vs expenses coming out.
I'd also let them see how we as parents manage bigger budgets, and how you have to really plan ahead for various things and choose your purchases carefully. I want my child to have a wonderful financial life as an adult. I don't know much about taxes, investments, stock market etc...but I know how to manage money and to save, so that is definitely what I/we will teach her.
Parents need to teach their children how to use money, or they will struggle with it throughout their lives. Giving kids an allowance or a way to make money and teaching them how to keep a budget is essential to their future financial health.
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