Raising Kids While on a Budget

I am a single parent committed to paying down my debt; increasing my emergency fund; making monthly contributions to church and charity; saving for home improvements and a newer car; planning for retirement; and my daughter's college education. Of course doing this means that I must first commit to my carefully crafted budget. What I neglected to factor into my commitments was getting my daughter's buy-in.

For anyone not used to living within a budget the change is much more than financial, it is a complete lifestyle adjustment. As shell shocking as budgeting can be on parents it is even more so for children when the new budget means changes to the routine. This dawned on me the first time I had to tell my daughter 'No' to an un-budgeted toy purchase. She was used to getting something, no matter how small, almost every time we walked into a store.

Following our uncomfortable store encounter I decided I had to find a way to introduce the changes to my daughter, and fast. I also had to keep in mind that she was eight. A college fund was the furthest thing from her mind. After a little research and a budget re-visit I implemented my plan. My daughter would begin to receive an allowance, out of which she would manage her own spending. Over time I would introduce her to budgeting and saving.

I wanted to make her plan simple and fun so I adjusted an easy budgeting suggestion I've read of, the "Envelope Method". I sat my daughter down with three envelopes and had her label, and decorate them, as follows:

1. Church

2. Save

3. Spend

It was important for our family to make tithing a part of our budget but this envelope could also be a general Charity or Donation folder or even a big ticket goal folder like Yearly Vacation.

On paper I saw her budget broken out as 10%-20%-remaining budget. Since her $7 allowance didn't break out into simple amounts for her to manage we started out with $.75, $1.50, and remainder. This method meant a little extra planning on my part to make sure I had singles and quarters on 'pay-day' but as her allowance has increased over time the breakout has become easier.

I explained to my daughter that once her Church and Save money were set aside (we'll decide what to do with savings later on) the spend money was hers to use as she wished. I also explained that once the envelope was empty she was done shopping and, except for items I already intended to purchase, mommy could not buy anything extra for her. I was also careful to point out that not everything in the Spend folder had to be used; it could be kept in the folder for the following week.

That Saturday, with folder in hand and the joy of her own money to spend, we set out to put my daughter's budget to the test. It did not take long for her to go from the girl who needed everything on the shelves to one of the most frugal and calculating shoppers in Heelys. While at times she emptied the Spend folder in the first store she hit, generally she bargain shopped and even held on to money for weeks at a time to purchase the item she really wanted. I had to admit I was impressed.

Does this mean that our uncomfortable store encounters have ceased? Not quite. She's a kid, encounters are to be expected. But since implementing her folders they are few and far between. This is the most that any parent can ask for. In the end, the folder plan has minimized our impulse purchasing and has made it easier for me to stay within the family budget, making life, and shopping with a kid on a budget, a lot easier to manage.