Live Within Your Means

Do you remember being told “No, you can’t have that” when shopping with Mom or Dad? Or maybe now you’re the parent telling your children “No.” What if instead the children make the call on what to buy and what not to buy? Either that makes shopping a lot easier or a heck of a lot more expensive!

Children don’t get a lot of practice on how to live within their means. That’s because they’re not the ones making the money. But wouldn’t it be better for children to learn at an early age how to spend money wisely? That’s where teaching the skill of prioritization comes in. As adults, we prioritize things every day: at home, at work, and yes, even out shopping. We understand that there is a limit to what we can or can’t do, so we need to decide what matters most, even if it involves sacrificing for the greater good.

The best way to learn about prioritization is to practice. When it comes to money, a budget serves as a useful tool to figure out what’s important. A budget will not mean much to a toddler, so let’s tackle this skill by grade level.

Preschool – Elementary

For young kids, set a limit on shopping purchases. Either using the money that children have set aside for spending or providing them with a stipend, let them choose what item(s) they want to buy. You may want to guide their choices by providing 3 of your own recommendations. However, the only way this works is if they feel that the money belongs to them, so they should make the final decision.

Junior High – High School

Since the teenage years introduce allowance and wages, children can shoulder some of the expenses they incur, like cell phone, gas, or food. This opens up the realm for ongoing expenses and non-tangible expenses which is good practice for adulthood. A simple budget could look something like:

$65 / Month Earned (or $15 / week)

(-) $20 Cell Phone

(-) $20 Savings

(-) $25 Spending

College and Beyond

College brings heavier expenses, so this budget will require ongoing monitoring and possibly revisions along the way. A sample budget might start out:

$1,500 / Month Living Allowance

(-) $1,000 Rent

(-) $200 Food

(-) $150 Car

(-) $100 Spending

(-) $50 Cell Phone

But later get tweaked:

$1,500 / Month Living Allowance

(-) $1,000 Rent

(-) $200 Food

(-) $150 Car

(-) $50 Public Transportation

(-) $150 Spending

(-) $50 Cell Phone

(-) $50 Gym

As we can see from this example, the student prefers to have more spending money than a personal vehicle. Regardless of what was chosen, the student was able to prioritize without going over budget.

Putting Priorities To Work

Keeping expenses low is especially important during this time of financial hardship for many. That is why it is even more timely to bring children into the conversation, so they can gauge their own priorities and figure out how they can aid in the family’s finances. The next time you go shopping, try asking your children, “To buy or not to buy?”

Homework: Give these prioritization exercises a try! How did you / your child do? Were any decisions tougher than others? If you found yourself analyzing the other possibilities, you just learned about opportunity cost!

If you like this lesson and want to see more, please consider a donation on GoFundMe.

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