As a parent, you are responsible for teaching your kids how to manage money. No matter what their age, children should start learning how to manage money throughout their childhood. Children taught these lesson turn tend to turn into financially responsible adults instead of jobless and in debt adults sitting on their parents’ couches watching TV all day.

Budgeting and Planning

Whether your child is five or 16 years old, they typically receive money from allowance, part-time job or as gifts for special occasions. This is a great opportunity to teach your children about budgeting and planning for the future. Yes, your child should be able to spend this money on what they want (to a point), but it should also teach them about spending responsibly. Instead of allowing your children to blow all of this money, require your child to use a certain amount of their money to pay for some of their own expenses. For a teenager, this may mean requiring them to pay for one tank of gas for their car each month. For a younger child, it may mean that they have to put 10% of it in their piggy bank to save for a rainy day.

Household Budget

It’s also important to teach your children that money is limited. A great way to illustrate this is with money jars labeled with the family monthly expenses. Using real money or play money, start out with a pile of money that includes the monthly income of your household. Go through the list of bills and expenses for the family each month, removing the expense amount from the pile of money and dropping it in to the appropriately labeled jar. Continue this until all of the expenses are paid. If there is money left over, explain to children that this is spending money. If there isn’t any money left over then explain that there isn’t any money left after bills are paid for any extras.

Live within Your Means

It’s also time to instill the need over want mentality in your children to teach them how to live within their means. Danny Kofke, father of two young daughters (5 and 2) drives this point home by paying an allowance in exchange for chores completed. Allowance money isn’t used solely for spending. Ava (5) is required to split her earnings between three jars–give away, savings and spending (in that order). If Ava sees something she wants, Danny and his wife Tracy tell her she has to see if her spending jar holds enough to buy it, or Ava can dip into her savings for items that may cost a little more.  Ava uses the give away jar money to buy presents for others and donate to organizations.

Financial Contracts

Teach children about contracts and financial obligations by acting as a lender from time to time. When your child wants to buy an item, “finance” it for them. You can form on agreement (on paper, if you wish) with the child where you fund the purchase of the item but they are required to pay you back with their own money until the “loan” is paid off. This will prepare your children later in life when it’s time for them to take out a loan or mortgage with a real lender.

No Bailouts Available Here

You may be teaching your child a more valuable lesson by not bailing them out every time they hit a financial snag. Financial snafus are opportunities for your child to learn ways to better manage their money or create a strategy to come up with the money they need to get out of trouble on their own–take on a job, get a second job or create a budget to manage their spending, so this won’t happen. If you do bail them out, then require them to pay you back.

Investing Today for Tomorrow

Take a trip to the bank with your child to open their very own savings account or take it a step further and open an investment account. Require them to deposit a certain amount of their money into this account on a regular basis. Sit with your child and review the statement for their account(s) each month so they can see how their money grows over time. It may seem like a basic concept but it teaches your child how putting money away today grows it for the future.

Bills of the Future

While your child may not have any expenses now, they will in the future. A good way to teach them what kind of expenses they’ll have in the future is to make a list and go over it with them. Teach kids about some of the bills they will be responsible for paying as adults. Again, this drives home the value of money, the need to budget and to cover necessities before being able to splurge on their wants.

Parents that teach children about managing money and finances tend to have responsible adult children. Take your opportunity to instill good financial habits in your children while they are young so they know how to manage their money later in life too.

Do you often wonder where you money goes? Do you struggle to save money after all of your bills are paid? The problem is your budget, or lack of a budget. Less than 5% of the households in the United States keep a consistent household budget, and that is why 95% of the nation struggles with money. The word “budget” has a negative connotation to many people. You don’t want to be constrained by a budget, and you think it will run your life. It could do that, but if you budget correctly, it will actually free you from living paycheck to paycheck.

The Basics of Budgeting for Married Couples

• Start doing it the moment you get married. The more you wait to start a budget, the less likely that it will become a habit in your household.
• Create a budget together. One of you might like maintaining and forming the budget than the other, but you BOTH need to be present to contribute to the budgeting plan for that month or period of time.
• Choose how you will keep your budget organized. You can use a pencil and paper, Microsoft Excel, Quickbooks, MS Money, or you can use an online application such as Mint.com.
• Write down all of your monthly recurring bills such as utilities, mortgage, cable, debt payments, and insurance. Then, estimate your other monthly expenses that tend to fluctuate such as food, gas, entertainment, clothing, and car maintenance.
• Continue to tweak your variable expense allowances over the next three months.

Budgets are not perfect, and they can make life a little frustrating at first. It’s no different than starting an exercise regime. Your body will resist the exercise at first, because it’s not used to doing it, but it will get easier the more you do it. Budgeting is the same way. Here are some common budgeting struggles that newlyweds often face:

One spouse is on board to budget, but the other is not. Talk through it, and try to figure out the root of the issue. Do you share the same goals with money? If you can’t come to a resolution, then seek out marriage counseling. You can’t have one spouse following a budget while the other spends whatever they want. It won’t work.

Neither one of you has the will power to follow the budget. Seek out another couple to keep you accountable. Ask friends of yours to keep you accountable with your budget. They can call you once a week to see how it is going. If you have someone else asking you about it, it will help you follow the budget better, because you’ll feel embarassed if you keep telling them that you busted the budget.

You get easily frustrated that the budget isn’t working. You will not get immediate results with a new budget. It takes three or four months to tweak the budget and start seeing results. Once you get it right, you’ll quickly see how much more money you have at the end of the month.

Here are a couple of free excel files to help you track your plan to get out of debt and create a budget.

• Budget Worksheet
• Debt Elimination Plan

Remember, budgeting is a way of life. You must develop the habit of budgeting, or you’ll drop it like any other fad. Once you see the results and the immediate income boost by spending your money on paper before you spend it, you’ll get excited. So, get excited, and start your budget today.