Do Kids Really Need To Learn How To Use Fancy Budget Worksheets For Managing Their Money?

Yes, and here’s why.

Most people get into trouble financially because they lack budget worksheets and “don’t know where all their money went!” or they don’t actually see the money.

With credit cards, debit cards, and automatic deposits and transfers…it’s difficult to know how and where your money is being spent.

But if you want your kids to be smart money managers and not fall into the debt trap, you should get them in the habit of tracking their spending and saving with some sort of budget worksheet.

And it should be a simple method.

My favorite is the envelope or “bucket” system.

And it works like magic!

A Little History Of The Envelope System

During the Depression, and for many years after, people didn’t trust the banks. So instead of keeping money in the bank, the envelope system became hugely popular.

And the savings envelope was usually hidden under the mattress for safekeeping!

The envelope system was a simple method. You set up separate envelopes, divided up your expenses, and then put the necessary cash into each envelope each month. And when it came time to pay the bills, you had the money to pay.

How Things Have Changed

Computers kind of took the wind out of the popularity of the envelope system. The FDIC also protects your money deposited at the bank. Now people can use checking accounts, savings accounts, and CD’s to safeguard their money and pay their bills.

But unfortunately, banks don’t help you manage your finances. They only track what you have in the bank, and what you’ve spent.

They do nothing to help you budget into categories of spending, tracking what you spend, and what you have left to spend or save.

And YOU have to keep track of your own many accounts, loans, and credit cards. This is the part of budgeting that most people miss – and end up way over their head in debt.

But not YOUR kids…because they’ll have learned and practiced the basics of setting up and following a budget worksheet.

But envelopes are sort of boring for kids, right?

So why not use colorful buckets instead!

Why You Need The “Bucket” System Of Money Management

In today's society, using “plastic” keeps you from seeing, touching, and holding your cash. No wonder it’s easy to lose track of the cash you really have to spend.

That's why using a form of budgeting worksheet is soooo necessary!

Now, I am not saying your kids should forget about using a checking or savings account at the bank, but I do think you should teach your kids the basics of managing and budgeting their money.

And the sooner the better.

This way they’ll be able to:

Keep track of their own money

Keep from overspending

Provide a solid basis for money management.

So How Does the “Bucket” System Work?

The bucket system works just like the envelope system but is a little more kid-friendly.

I like to start out with 5 buckets...

A blue bucket for savings

A green bucket for spending

A purple bucket for donations (for our kids, this is actually the church envelope!)

A red bucket for emergencies (or rainy day fun)

A yellow bucket for special items like a new bike or an Ipod

You’ll be amazed how this “bucket” system really does work and teaches your kids how to budget their money -- automatically!

Recommendations For Teens (Or You)

As your kids get older, they’ll be too “grown up” for the bucket system. This is when I recommend having your teens use a little more advanced budgeting system.

So they can practice their budgeting skills and use it while they’re still living at home.

There are two products I highly recommend that follow the Envelope System, One is a type of personal budget worksheets software for use with your computer and/or PDA, the other is a paper based budgeting system that fits in your checkbook...

Check them out and see if one of them will work for you, and your lifestyle:

MyVelopes Personal Budgeting Worksheet

This is a budget worksheet system that makes it very easy to create an effective personal budget and track every aspect of your spending as it happens. You will always know exactly how much you have left to spend, know the impact of every spending decision, be able effectively manage credit card purchases, and effortlessly be able to create an easy to use budget worksheet plan that works for you. On top of all that, you can easily print out reports and have online tracking anywhere, any time.

Manage Your Money With BudgetMap!

Get set to be able to track all of your income and spending, including credit card use, bank accounts, and cash on hand. And it's small enough to carry with you right in your checkbook, purse, or wallet! And as easy to use as a checkbook.

So be sure to get your kids into the habit of managing their money with some type of budget worksheets, starting with "buckets" to PDA style systems under your guiding hand.

Don't worry if they make mistakes - we all do!

The important goal is for your kids to learn from their mistakes and practice using budgeting worksheets from a young age.