Teaching Your Child How to Budget

When your child becomes a teenager, it is time to teach them about money. For example, you can give them several hundred thousand won in allowance at once and teach them to allocate it themselves to cover their expenses for 6–12 months. Teenagers need to begin learning financial responsibility. Budgeting may feel daunting and difficult at first, but they will gradually adjust.

Encouraging children to create their own budgets is a good way to help them develop a sense of responsibility.

Giving children an allowance weekly or monthly is ineffective because they may create only a short-term budget and spend all the money. They know that even if they spend it all, they will receive another allowance the following week or when the next month begins, which may be only a few days away. Instead, have them make a long-term budget covering at least six months. Teaching children how to plan for future expenses and save is very important because these are two essential habits that can help them become financially secure adults.

This approach also helps children gain confidence and learn to identify what they truly want, along with their goals and priorities.

At first, giving a child a large sum of money all at once can feel daunting for a parent, and receiving it may also feel overwhelming for the child. It can also be difficult to determine how much allowance the child will need for six months. Parents should talk with their children about money and teach them how to save. If children fail to manage their budgets, encourage them to reflect on what caused the failure.

[FamTimes=Reporter Jo Yoon-ha]