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Dollars & Cents for Youth
Lesson 4 - Study Course For Parents

Main Ideas • Key Words • Money Talk • How to make a Spending Plan • Where Do You Start • Things To Do • Planning for the Future • What I Have To Spend • My Spending Plan • Personal Needs of Children • Lesson 5

Main Ideas

• Allowances, gifts, handouts, and earnings are the sources of money available to children.
• Writing down your income and expenses can provide a guide for planning your spending.
• A spending plan can be a guide for achieving goals.
• A spending plan needs to be simple and suited to your needs.

Key Words

Spending Plan - A simple guide to help one see where money comes from, where it's going, and how one might direct it to meet needs and wants. Some people call this a budget.

Income - Money you have to spend.

Expenses - The money you spend to buy the things you need and want.

Money Talk

"Money Management" sounds like a huge task, but it is simply knowing how much money you have to spend and then planning how to spend it. Children get the money they spend in various ways. Gifts, earnings, allowances, and handouts are the major ways children get money. Some less productive ways might be begging or asking for money from parents or relatives, stealing, charging at store accounts, or borrowing from others.

A sound method of managing money is a written spending plan. Children may have no idea how much money is being spent on them or how much they are spending until they see it in writing.

A spending plan can help clarify ideas and goals. The plan is a tool to guide them in making decisions and choices. When making a spending plan, remember what your needs and wants are. A need is something necessary for life, such as clothes, food or housing. A want is something you believe will make life happier and easier, but it is not necessary for life. In other words, you could live without it.

Do not wait until the child is old enough to earn money to start talking about spending plans. As soon as the child is old enough to receive an allowance, introduce him/her to the idea of a spending plan. Depending on age, maturity, and amount and frequency of allowance or income, help the child make a daily, weekly, monthly, or yearly plan. The plan for a 5-year-old would be quite different from that of a 15-year-old.

How to Make a Spending Plan

A spending plan is a simple guide to help see where money comes from, where it's going, and how one might use it to meet needs and wants. Making a spending plan with your child can help you decide the amount of allowance your child needs.

• What do you need to know to make a spending plan? Answers to the following three questions will get you off to a good start.
• How much money do I have to spend?
• What are my needs and wants?
• How much do my needs and wants cost?

Where Do You Start?

First, you will need to keep a record of your spending for a few weeks. This will provide a good base for better planning.

After 3 or 4 weeks of keeping a record of spending, you are ready to make a plan. By this time, your child will know how money is being spent and will be better able to control the way he/she spends money in the future.

Steps in making a spending plan:

• Write down your income for the week and total (examples: allowance, earnings, gifts)

• Write down the expenses you are planning on during the week and total. How does this compare with your income?

• Record your expenses for the week and total.

• Now compare your planned expenses and your actual expenses.

• Make necessary changes in your spending plan for the next week. Some adjustments in spending or in the amount of allowance will be necessary if expenses are out of line with income.

The success of the plan depends on frequently checking on where money is going. You and your children may wish to make some changes. The following forms can be used as you help your children develop spending plans.

Things to Do

Parents

You might want to work on a family spending plan either alone or along with your children. Ask your county Extension agent for Extension publications listed at the end of this lesson. Use "Planning for the Future" and "My Spending Plan" with your children.

Help your children learn more about their needs and wants. Use the chart, "Personal Needs of Children," to help. Filling out the chart will help you and your children better understand money needs.

Planning for the Future

What I Have to Spend

My Spending Plan

Personal Needs of Children

Lesson 5

The next lesson will look at the pressures of advertising and how you and your children can deal with these pressures.

Additional information from your county Extension office:

Financial Fitness Series: Shape Up Your Spending, FSHEC-42

This material was originally prepared by Joyce H. Jenkins, Extension Family Resource Management Specialist, and Naomi H. Willis, Extension Instructor of Home Economics, and is being used with permission of Clemson University Cooperative Extension Service. Recommended to Arkansas by Wanda W. Shelby, District Extension Family Resource Management Specialist, University of Arkansas Cooperative Extension Service.

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