(Since my "guest" posters are in the middle of the "Living It" part at the moment, I'm sharing a previous personal post from February 5. Hey, "Real Life" happens -- so do reruns.)
When our home was bustling with teenagers and pre-teens (about eight years ago) and there were many demands on our money, we decided it was a good time to "show and tell" them where the money goes. We gathered our family together for a Family Home Evening and presented them a "hands-on" financial management course.
My husband obtained enough one dollar bills to equal one-month's salary (which task was more of a challenge than we had first thought.) On a poster board I wrote down our financial obligations and offerings for one month. (We had to figure out our income and expenses for the whole year and divide that by twelve in order to get a realistic idea of a one-month budget.) Our list included:GROSS INCOME: (never could figure out why they call it "gross" income before taxes are taken out. To me it would make more sense to call "net" income "gross" because it's just gross to see so much taken out of your salary.)By the time we got to the "Other" category, there were just a few dollars left. Everyone was silent for a brief moment as we looked at the piles. REALITY CHECK! Whoever said, "a picture is worth a thousand words" was right.
Taxes - Federal and State, Social Security
Tithes and Offerings (first and always - everything else somehow works out)
Insurance - auto, health, home and life
Mortgage - plus extra put towards early payoff
Auto - car payment, oil changes, new tires, etc.
School expenses - fees, books, clubs, drivers ed, etc.
Lessons - music, sports, etc.
We explained that there are some categories we don't have much control over such as taxes, mortgage, and insurance. There are categories we do have a little more control over -- such as electricity, natural gas, and water -- by using less, turning off lights when not in use, having shorter showers, etc. Food and clothing are other areas where we can save money...which led to another discussion..."needs" versus "wants". We also set family goals and talked about ways to achieve them.
That night was one of many geared towards teaching principles of financial management. It was an "eye-opening" experience for each of us and one that we'll remember. There was more understanding when requests were made and we worked together as a family to save where we could.
I've also heard of people using "Monopoly" money to teach this concept to their family. The ways to teach the principles of financial management are varied. Use whatever method(s) that will work best for you. The important thing is to take time to TEACH family members...the dividends will be priceless!