Building Budgets for Kids

SUSIE GHARIB: Big yellow school buses and backpacks brimming with supplies, we all know this means the nation`s kids are heading back to school. For the next several Thursdays, our “Kids and Cash” series mines the back-to-school season for some real world lessons in finance. Tonight, Neale Godfrey tackles budgeting. She`s CEO of the Children`s Financial Network.

NEALE GODFREY, CEO, CHILDREN`S FINANCIAL NETWORK: Back-to-school means back-to-spending. But suppose you could turn it into back-to-basics? This is a great time of year to teach your child about budgeting.

Start by helping them make a spending budget for the two major categories of back-to-school: supplies and clothing. The first step is to get a list of all the recommended supplies your children will need for the school year. “Need” is the operative word here.

Give each child a small notebook and show them how to list each item and put its price next to it. Ask what supplies they think they`ll need or want for this year. You can see where I`m going with this.

You agree to pay for all the needs, and they pay for their wants. Do the same thing with their clothing budget. Their list should detail what they think they need. You may be surprised at the cost and, hopefully, they will too.

Then you decide the final amounts. If they think they need five pairs of designer jeans at $150 a pop, you get to say, no, I`ll pay for the $35 pair. This is not easy, but hopefully worth it.

Your children can now start to understand the dynamics of planning and, most importantly, budgeting.

I`m Neale Godfrey.

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