Teach Your Kids About Personal Finance With Refrigerator Economics
Who needs a blackboard when a refrigerator will do? Here's a fun and interesting way to teach children about home economics - refrigerator style.
Despite the recession (that they must have been ignoring), kids still can't understand the value of a buck. No matter how much you say it, the adage "money doesn't grow on trees" never seems to compute for teens, especially when it affects their trips to the mall with friends.
Relax, there's an easy way to keep those teens in line and it's as simple as ABC or 123.
Refrigerator economicsThe technique utilizes the surface of a refrigerator to track finances so that children can see the ebb and flow of monthly expenses. It's the perfect way to show teens, and young children, how quickly money moves around. It also serves as a good building block for future money management as they learn a little something about keeping a checkbook in balance.
How a Fridge Budget WorksWith a bold dry erase marker, write your beginning checking account balance on the front of the refrigerator. Each and every time you use your debit card or write a check or autopay a bill, âwithdraw" that money from your refrigerator account. You're creating a âlive" version of your checking statement for your children to see right there, in black and white. When you make deposits and increase the balance, and your child starts making noises about getting a tablet explain the upcoming household expenses. With the warmer months upon us, your teen will get to see first-hand how much it costs to feed your family, and get through this busy season without breaking the bank.
It won't take long for your child to grasp the concept of budgeting and saving, or how much vacations and summer camps impact household finances. Even more importantly, it can help to keep the whole family on budget. With financial problems one of the leading causes of divorce, it makes sense to ensure the whole family understands the importance of remaining financially solvent. Be sure to explain to your children terms like "debit" and "credit", and what an automatic payment is, and above all, how important it is not to exceed your income.
Give Your Teen His or Her Own Fridge SpaceDon't stop there. If your kids are old enough, have them track their own finances on the side of the fridge. Have them start with their allowance, adding in cash gifts and income from part time jobs, and subtracting money they spend. Do they pay their own cell phone bill or pay for gas? Do they owe you for a personal loan? Have them record their balances on those as well, and put any mini shopping sprees they don't tell you about under âmiscellaneous". You're not only teaching them about financial responsibility, but you're putting them in charge of answering âWhere did all the money go?" at the end of the week.
You Can Track All Sorts of ExpensesWith a little creativity parents can use ârefrigerator economics" to track a whole host of other things too, like:
- Holiday shopping budget
- Dining out budget
- The cost of maintaining a pet
- Cell phone overage charges
- The grocery list