A spending plan actually is another word for budget. It allows a person to plan for upcoming expenses and ensure that money is available to meet those expenses. Helping your child set up a simple plan now can lead the way to more detailed spending plans in the future.
Children learn most money management concepts by observing parents' behavior. Your attitude toward recordkeeping, balancing your checkbook, or following a plan for saving and spending strongly will influence your child's involvement in setting up a recordkeeping and spending plan.
Using the two-week record of income and expenses that your child has completed, break down items into income sources, fixed expenses and variable expenses, as shown at right. If expenses are greater than income, discuss ways to increase income or decrease expenses. Savings never should be eliminated from fixed expenses. During the discussion, guidance can come from you as a parent, but the final decisions on how to balance the income and expenses should rest with the child.
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Reprinted with the permission of North Dakota State University.
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