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Pillars of a good budget

Budgeting is a crucial skill. Without a budget, it can become difficult to track your spending and reach financial goals. By encouraging your kids to master the art of budgeting, you can foster habits for a healthy financial future and responsible decisions. 

A successful budget does not start with just enough money to do everything – but careful planning to best meet the needs of the month. After all, what forms a successful budget? 


The Pillars of Successful Budgeting

  • Clearly Defined Spending Categories

Though a template is a good place to create budgets with your kids, make sure that the categories for spending align with your child’s spending patterns. Including categories more relevant to their age and where they are likely to spend, such as games and food can lead to a more personalised budget, which will also enhance their understanding of the concept. 


  • Average Income

As kids are unlikely to have regular income,by constantly highlighting their average earnings (from reward systems, gifts, etc.) and what they plan to spend on can lead to a balanced budget. This will give them the vision to create a realistic, easy-to-follow budget. 


  • Having a Section for Emergency/Unexpected Spending

It can be difficult for kids to resist the urge for gratification. Therefore, you can also include a separate section for unexpected, comparatively larger blocks of spending, that you can track and guide your kid on towards the end of the month. 


  • Saving Goals

For kids, the parents often need to help with setting realistic goals. These, along with small incentives can encourage them to keep going. However, by having a saving threshold that they need to meet, possibly through the Budgeting Rule, you can make sure the budget is balanced. 


The Other Pillar: Setting the Right Mindset

Apart from the characteristics that help form a successful budget, encouraging your kid towards the right mindset through a number of activities also makes sure they stick to the budget and reach the desired result. 


  • Establish the right motivation: By ensuring that the budget brings them closer to their financial goals or something they are saving up for, say a new video game, you can make sure that the motivation factor is persistent throughout. One of the important factors here is to start early and ensure consistency, which is key in habit development. This will make sure they stick to the budget, as well as effectively develop it as a habit. 
    • Constant Support and Review: One crucial factor is the constant involvement of the parent with the child. With constant reviewing of your kid’s interaction with the budget, you can make sure they are on the right track. Make sure to support them in any pitfalls that may happen during the month. 


  • Ensure flexibility to foster a sense of independence: It is always better to have a few loose ends during the making of the budget for the kid– where they are free to occasionally make changes, like increasing the spending budget a bit. This will give them a sense of independence that can incentivize them further. 


By keeping these few things in mind, you can make sure that you encourage the right mindset in your child. The budget is not a restrictive tool, but a medium to successfully plan for the future. By helping them create a positive mindset about budgeting, your kid is more likely to develop the skill. 


With Milestone, budgeting can become even easier. Experience seamless tracking and transparency in your child’s progress. Together you can set up goals, assign chores and reward them for their positive behaviour.

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