Teaching children to save and how to create a budget is one of the most important financial lessons
Children hear about the importance of saving continuously but fewer are the lessons on how to create a budget that helps them save money. Teaching your kids budgeting and saving from an early age will help them many times over in the fuure.
Today’s essay is by Chelsea York, a student at the University of Arizona. She shares how her mother taught her to create a budget that makes saving possible and how to invest in her future.
Check out Chelsea’s story and please share on social media. The most-shared essay on how parents can teach their kids about money will win our $500 personal finance scholarship, announced August 31st!
Starting late and need to get your personal finances going? Check out this resource guide on getting started in budgeting, saving, investing and making more money!
Learning to Save from Childhood
Throughout my whole childhood, my mother raised my brother and myself on her own. Although money was not always plentiful, she ensured that there was enough to pay all of the bills and to keep food on the table.
Whether her career in accounting led her to be gifted in the field of personal finance, or if it was from her own skills, I am grateful. From a young age, my mother would always encourage me to compare prices whenever we went shopping together. It taught me that those that are the most expensive are not always the greatest, and those that are the cheapest are not always the worst.
Through her continuous teachings, I have learned how to shop in a financially responsible way, and to inspect products rather than just buy straight away.
Investing in My Future by Saving
Growing up, my brother and I were fortunate enough to receive a monthly allowance from our grandparents. While my brother went off and spent his money on practically anything that moved, I chose to invest my money. With my mother’s help, I opened up a savings account and put a portion of my allowance into it every month.
She would discuss with me the importance of setting money aside, and how it could help me create a secure future. Although I did not understand everything she told me about how interest worked, I knew that having even a little bit of money in a savings account was better than nothing.
As I got older and wanted to start taking money out of that savings account, she warned me about the risks behind withdrawing too much money and using it just to splurge myself. She told me that having some sort of budget in mind when withdrawing money was important, as to avoid taking out too much and not having enough when I really needed it.
From a young age, I was told to keep a minimum of $500 in my savings account for dire emergencies, and that is a lesson I still follow to this day. Now that I am much older, and have to worry about such things as paying for gasoline or car insurance, my mother’s budgeting lectures have come in handy.
Don’t let your emergency fund sit there. Learn how to invest an emergency fund for safety and higher returns.
Budgeting to Save 30% of Income
At the beginning of each month I calculate how much I will need for whatever bills I might have, and make a higher estimate than normal for potential gas expenditure just to be on the safe side. From whatever money is left over after that calculation, about 30% of it goes into my savings account, and I allow the rest to reside in my checking’s account.
It ensures that I always have some sort of backup money should something bad occur, and has helped to make the financial aspect of college less stressful than it is for others. While friends of mine are always stressing out about running out of money for food, I am secure in the knowledge that I have money set aside for such things, and that I will not have to worry about dipping into my savings just to eat.
It is with my mother’s guidance that I am able to handle my finances as well as I do, and her encouragements have led me to realize that I am vastly interested in the fields relating to dealing with money. Without her helping hand throughout my childhood, and even into adulthood, I may have ended up like many of my friends, always stressing out about money and not knowing what to do.
Read next: Learn the difference between good debt and bad debt to get the most of your financial tools.
Even though I may not have a lot of money due to pursuing a higher education, I have made it a mission to inform any of my friends or younger acquaintances of the importance of managing one’s money, and how helpful it will be in the future. Knowing how to deal with personal finance is an important part of life that is not going away anytime soon, and I was one who happened to be fortunate enough to have a mother that was always willing to teach. Who knows where I might have ended up at otherwise.
I want to thank Chelsea for her essay on how she invested in her future by learning how to save. Be sure to support Chelsea by sharing the article through social media and check in August for the winner of the personal finance scholarship.