Avante Media

Children learn many things as they are growing up, both at home and at school. There are many arguments as to what the most important thing that they can learn is, but budgeting is something that is so important that all children should learn it. There are some lessons in school teaching it, but it is also important for parents to reinforce the message so that children have a good understanding of it. But why is it so important?

Avoiding unnecessary debt

Debt is something which many of us have and it is seen very much as a normal part of modern life. Although some debt is okay as we otherwise would not be able to buy houses or go to university, a lot of debt could be avoided if we managed our money better. If we understand the principles of budgeting from a young age this could really help us. Understanding how to make sure that we have enough money to cover all of our bills and basic needs before we spend money on luxuries is such an important concept to grasp as well as understanding about types of debt and when it is appropriate to borrow money and when it is not.

Being in debt can be a problem in many different ways. It can be a source of stress, knowing that you owe money. It can be difficult finding the money to cover the cost of the repayments. The cost of the debt could mean that other things are unaffordable and it could mean going without heating or food in order to afford them. Many of us also borrow money without really needing to. We spend too much money on things that are not necessary or overpay for things and then end up having to borrow to cover those costs. Understanding how to only spend the money we have and how to prioritise spending can help us to avoid unnecessary debt.

Having financial stability

Knowing that you are in control of your money is a great feeling. Whether you have a high or low income, knowing that you are living within your means is great. It is even better if you are able to save a bit of money each month as well. Whether you are a high or low earner, budgeting is really important. It is just as easy to get into debt if you earn a lot as if you earn a little if you are not careful with what you are spending. If you income is higher you tend to have more borrowing options available to you and so it can perhaps be even easier to get into debt and then start to struggle financially.

Knowing that you are managing your money properly and that you have enough money to cover all of your bills each month can be a great feeling. Having some savings behind you can be even better so you know that if you have an unexpected expense then you will be able to pay for it without any stress. Having that financial stability, whatever income you have can lead to a sense of freedom and avoids the stress that debt can bring.

Avoiding financial stress

Financial stress is something which we have probably all had at one time or another. Being able to avoid this by knowing how to manage your money can be fantastic. Sadly, many marriages break up because of problems with money. The stress of debt can cause a relationship to break down. If all children understand about budgeting and the importance of managing debt well this should avoid many people getting into this situation in the first place. This could help people to no longer argue about money and it could help relationships to last much longer.
All stress can be detrimental to our health. It can lead to us being more likely to get unwell with physical diseases but also with mental illness. This can lead to all sorts of problems with missed working days and possibly then lower pay which can make the problem even worse. It can also make our quality of life poor and even shorten our life. So if we can avoid stress then we can have a much better life and just learning about how to budget and the importance of budgeting can make a huge difference.

Obviously there are many important things that children need to learn. However, money is such a fundamental part of society and such an important tool that it is so good to have the necessary skills to be able to manage it. Being able to be in control of money rather than letting it control you is so important and can make a huge difference to happiness and health. So starting with understanding basic arithmetic, money maths and then balancing a household budget is something that every child should be taught.

This might seem like a ridiculous question and you might think that there is a very obvious answer and you may even wonder why you are reading this! However, do read on as you may be surprised by the answer, as it is not a clear one.

Managing on less money

If you have a lower income then you have to learn to manage on less money. Some people will have already done this in the past and may think that they could easily do it again. However, as we get used to having more money, then we can find it increasingly harder to budget wisely and get used to spending less.

If you do not know how to budget then you will need to learn. You will need to find out what things you have to pay for and then calculate how much money you will have left to spend on variable costs with the remainder of your income. From this you might want to calculate how much you will have to spend per month, week or even per day depending on how often you spend money.

It may be that you will have to make some drastic changes to your spending in order to manage. It could be that you will have to spend less on leisure activities, eating out, clothing, holidays, take away foods, alcohol, gifts, charity donations and things like that. It can be difficult cutting back on these things, but you may find that you do not miss going without some of the things.

If you are forced to get into these habits then once your finances improve again, you could find that you will be much better off. You will be more aware of what you are spending, more used to checking prices and better at avoiding buying things that are not necessary for you to have.

Being less stressed

If you have a less stressful job, which can often (although not always) come along with lower pay this can help you to feel more relaxed. It means when you are not working you are in a better state of mind. You will have more energy and this will enable you to spend more time planning your spending and saving. You will have more energy for shopping so you will be able to spend the time comparing prices and being more careful with what you are buying. You may even have the energy to look for other ways to earn money in your spare time, which could help you even more with your finances.

Of course a lower paid job could be more physically exhausting. However, if you are using your mind less in work it will give you tie to think. You could ponder how you might be able to cut down on spending or how you could earn money in other ways while you are working.
Getting into good habits

So while you are on a lower income you will be forced to get into better spending habits. You will have to budget and manage your money well so that you do not get into debt. This will enable you to learn the benefits of spending less money and how to manage without spending so much. These habits are well worth learning. Even if you knew about them, having to put them into practice every so often can be really useful as it will be a reminder to us. It can be easy to slip back into old habits if we can afford to when actually being careful with money all of the time can be really useful. It can mean that we are able to build up some savings and then if we do go through a period of time when we are short of money, we will be able to manage more easily as we will have those savings to fall back on and will already be used to spending a smaller amount of money.

So although in the short term we could struggle if we had a lower paid job, it could lead to us being much more frugal and developing much better financial habits. If we keep those habits all of the time then we will be able to manage our money well all of the time and might be able to start building up some savings as our income starts to increase again. We might even continue to find additional ways to earn money as well so that we can start to make even more money. So the question as to whether a lowered paid job could improve our finances is not as silly as it seems. If we have got into a habit of spending more than we need, then it could be a reminder to rein that in and waste less money. It could also force us to be more creative with our leisure time and perhaps think of ways that we can use it to make extra money.