Financial Tips They Don't Teach in Schools - Brink's Money
Financial Tips They Don't Teach in Schools
27 May 2021
Why does it seem so hard to save up money when it's so important for the future? If you're like most Americans, you probably didn't learn much of anything regarding budgeting or financial planning in school.
Still, creating a budget and building personal savings are important steps toward achieving financial stability, and someone has to show your kids how to do it! To help you make the most of financial planning with your kids, whether they're still in school or adulting on their own for the first time, we've put together a list of DIY financial tips anyone can start using.
No matter what direction you go with your budgeting and saving, you need to understand your financial needs.
Help your kids understand the difference between essential expenses, like food, clothing, and bills, and other "fun" expenses like going out on the weekends or subscribing to streaming services. If they already have bills they are responsible for, they should know the totals of these two types of expenses.
These numbers should form the base of any budgeting and savings plan to set realistic and achievable expectations.
Setting goals for your budget will make things easier for you in the long run. For one, it's impossible to prepare for something if you don't know what you're saving for. Establishing financial goals is also a good way to stay motivated. If you have to make hard choices about your spending, having a meaningful reason to do it makes it easier to stick with.
Sharing this information with your kids helps in two ways: they get involved in the decision-making with you, and they also learn how to save for their own goals.
Some common savings goals you could share with your kids include:
Saving money for school tuition
Building an emergency fund to handle three to six months of expenses
Saving for a down payment on a house
Investing in your retirement
Saving money to pay down (or pay off) debts
Starting a vacation fund
Your savings goal can be whatever you want. If you're just getting your kids started, try picking a smaller, short-term goal and build from there to create momentum.
Even if your child has outgrown a weekly allowance and is making their own money (even part time), you can help them set up their own allowance from their paycheck.
Start with setting a weekly allowance. This shorter increment will help them pay closer attention to how they're spending their designated funds. It's best to use cash or a prepaid debit card for this since it can be easy to lose track of spending with a credit card.
Setting an allowance for yourself works because it lets you still spend money on things you want and enjoy but forces you to be mindful of what you're buying throughout the week. Budget beginners might find this method easier to start with than something like the envelope or cash-only method since there is so much less to manage.
Planning your budget is only half the battle. The biggest mistake people make when trying to save money is not keeping track of their spending. A few splurges can add up more quickly than we think.
How you keep track is totally up to you, and you have a lot of options. Some people like to track all of their purchases on a notepad. This can be useful for people who do a lot of online shopping since writing purchases down by hand forces you to be more aware of your spending habits. You could also try tracking on a simple spreadsheet in Google Sheets and Excel. Many young adults might prefer an automated app that can connect to your financial accounts to give you at-a-glance summaries of your monthly spending.
If the word "budget" gives you a sinking feeling in your stomach, you're not alone. Many of us have been conditioned to associate budgets with restriction and stress.
Help your kids get a new perspective on their budget with a fun, motivating name. This is where your defined goals and wants come in handy. Think about everything your budget will give you and pick a name for it! You might call it a plan for wealth management or your financial future, or even name it after one of your goals. A sense of humor can go a long way when we're talking about something that often causes so much stress.
Continue your financial education
Your kids should know that getting a budget together and sticking to it doesn't have to be hard and complicated. What's most important is that you have clear goals, make an action plan, and then stay consistent. With your eye on the prize and a clear path towards it, you and your children will be well on your way toward taking control of your finances and preparing for your future.
To continue learning how to manage your finances better and for more financial advice, visit our Brink's Money Insights Library.
More from our insights library:
How to Communicate Changes to Expense Management
Changes to expense management are tricky. You’re having a direct impact on the availability of or accountability for a financial perk. So how do you get change management right?
Budgeting Basics: 4 Approaches to Business Budgets
Ready to set a budget for your business? Trying to improve on your current process? Learn the pros and cons of every option.
Earned Wage Access vs. Early Direct Deposit: What’s the Difference?
Why do most of us get paid every two weeks? The answer is about technology—outdated technology, in particular. Until recent decades, all paychecks were, in fact, physical checks. Checks take time to produce, cost money to mail, and require effort to deposit at a bank. All those factors supported a longer stretch between pay periods. But those hurdles are now avoidable.