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How to Budget & Balance Accounts: Financial Skills

How to Budget & Balance Accounts: Financial Skills
"""When I asked parents what life skills they wished their children had, I was startled to hear that the following subjects were frequently requested:

Opening a Bank Account
How to balance your budget and accounts
How to pay bills and write checks
also how to begin retirement saving
It appears that as a result, some of the concepts we teach children are lacking.

We concentrated on opening a bank account in the last article. In the second of a four-part series, we'll look at how to educate kids how to balance their accounts and set a budget.

Budgeting

The fact that budgeting can be laborious and monotonous is not shocking. Personally, I've never looked forward to sitting down and making my budgets, but it's a task that generates money and pays off in the long run.

So how can you pique kids' interest in it? How can something so uninteresting and unglamorous be given a little glitz? Simple: turn it into a game with prizes.

It's crucial to first understand how to make a budget, then to stick to it.

Establishing a Budget

It's fine if you have your own method for making a budget. In my opinion, the following is the simplest method for creating a budget:

Draw a line in the center of a piece of paper so that:

Spending Plan

Put your average monthly gross income at the top of the page, multiply it by.80, and you'll get $800 (so if you made $1,000, you'd get $800).
Fixed Costs
On the left side of the page, make a list of all of your FIXED spending categories (such as phone bills, insurance, and mortgage payments).
Variable Costs
Next, list the categories of variable expenses (such as food, petrol, entertainment, etc.) in a separate column on the right side of the page.
Include all of your expenses here.
After fixed expenses, the net budget - Take fixed costs out of your spending plan. If the number is positive, there is nothing you need to modify. If it's zero or a negative figure, you should try to reduce or eliminate your spending.
Determine how much you can spend each month on variable expenses without going over budget by subtracting fixed expenses from your net budget.
To determine how much you can spend on each category in a given month, create a budget for each variable item.
Funneling it up

Now that you have a general idea of your budget, it's time to engage the children.

You might be thinking, ""My kids will never be enthusiastic for this, "" and I understand that.

If you provide them some rewards or awards, they will. This is how:

First, describe a budget to them and provide them the paper. Next, let them know that you'll be holding a competition (if you have more than one kid, this works even better).

First competition: Projecting spending

In the first competition, participants must budget their money as closely as possible in order to achieve break-even or $0 over the course of a month. In other words, the objective is to estimate your spending as accurately as possible.

The child who comes the closest to breaking even without falling into the red wins a gift if you have more than one child. Tell a single child that they will receive $5 or $10 if they reach break-even, and that for every penny they are off, you will remove 14 of that amount.

Second-place prize: saving after spending

The second challenge will evaluate their ability to manage their finances over the following 30 days. Inform them that you will give them any money they manage to save if they can. Accordingly, if they save $5, you'll pay them an additional $5 (much like when employers match a worker's 401(k) contribution).

If you have multiple children, explain to them that the one who is able to save the most money will win and receive an unique award. Since you are the expert on your children, you will undoubtedly choose the prize.

Arriving Soon

How to write checks and pay bills will be covered in the following article. You'll discover how to incorporate check-writing activities into these competitions so that your children may experience budgeting in the real world."""
 

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"How to Budget & Balance Accounts: Financial Skills" was written by Mary under the Business category. It has been read 32 times and generated 0 comments. The article was created on and updated on 16 November 2022.
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