Create a See-Through Budget that your Children can Learn

Wed, 03/19/2008 - 16:20 by Anonymous

Create a See-Through Budget that your Children can Learn

How much is a trillion? If you had a tightly packed stack of $1000 bills, $1 million would make a four-inch stack, $1 billion would cover the length of a football field and $1 trillion would make a stack 63 miles into the sky.

Those visual images are easy to understand and explain. Are the messages we send to our children about money this clear?

The Invisible Budgeting System

A typical American family pays their bills online and pays for groceries and clothing with a Debit or Credit Card. Paychecks are often direct deposited. While all of this is very convenient it creates an Invisible Budgeting System that is not easy to teach and is impossible for children to see the connection between working, earning, and spending

Children are naturally curious. They want to be involved and they want to understand what everyone else is doing. If you give them the opportunity to see how finances work, they will pick up personal finance and budgeting skills.

The Glass Jar Budgeting System

Perhaps an old fashioned budgeting system would serve our modern families by providing the opportunity for children to see how things work.

The Glass Jar Budgeting System is made up of large canning jars labeled for each expense: charitable giving, saving, housing, utilities, food, transportation, clothing, medical, personal and entertainment. After getting paid, you take out cash and the money for each is placed into its jar.

When there are special needs extra jars are created. For, example, a special jar is created for “prom” so that planning for the extra expense is done in advance. This way the family can work together to save for the event and they can all see the progress easily.

The Glass Jar System of budgeting allows children to understand the family finances. Money is right there for everyone to see and monitor. Where the money comes from is clear, and where it goes is also clear. There’s no mystery to the family finances.