Sunday, January 17, 2010

Budgeting for Kids

"Most kids have no concept of how much things really cost."  (Did I hear an "amen" from all you parents?)  That's from an article that came out before Christmas, courtesy of  There are some good principles for helping children understand the value of money.  Even if you don't agree with all the principles and applications presented, it is clear that it is our job as parents to teach our children about finances. 

One of the most important concepts to understand about money is that it is really a function of time.  Money is earned, and in order to get it, we must sacrifice a certain amount of time.  For example, if your student earns $6 per hour, then they must trade in 5 hours of their work day to buy that $30 sweater.  Likewise, if they want you to buy the new video game console, with extra controllers and games, that could total $300 or more.  If you take home $15 per hour, then to buy that toy requires you to work 20 hours (not counting taxes)!  This definitely puts a different perspective on what things really "cost."

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