I'm a Military wife, mom of boys, life style writer, love music, baker, crafter, foodie, picture taker, fitness junkie, LOVE being outdoors and secret Starbucks addict.

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Cash Only?

Children & Teens do not have a concept of money. Let’s be honest, some adults don’t have a concept of money either.  With everything that has been going on in the economy it is a critical step right now to teach our kids to manage money by only using cash.

The convenience of a credit & debit card does not show the actual exchange of their money for their purchases.  They simply learn to swipe a card for any and every purchase, never stopping to realize the impact that each swipe of the card has on their money and budgets.

It is a different lesson when they have their cold hard cash in their hangs to pay for their purchase. It provides a very real exchange of their money disappearing before their eyes.   Helping them develop the habit of only paying cash as opposed to using credit will serve them well throughout their entire lives.

So, what is a simple way to teach our kids budgeting with cash? The old fashioned “Envelope System.” Buy a pack of small envelopes at the dollar store, have your kids decorate/design each envelope for their different items. Savings, Donation, Clothes, Movies, Toys, iTunes, Games, Whatever your kids want money for, label the envelope.

When they earn money through chores, babysitting, mowing lawns, etc, have them separate their money so that each envelope has equal funds. When they want to go shopping, have them take their envelopes so they have the money to pay for it. When they see their money disappearing, they’ll have a great appreciation for earning their money, and for their parents’ hard work.

Cash Only Envelope System

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Comments (7)

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  2. falwyn 12/16/2011 at 1:02 pm

    I absolutely think that not using credit is a wonderful, essential skill to teach your children (and yourself!). I’d love input/advice/ideas from people on this though – what about online purchases? I live in a small town and do a fair amount of online shopping. Any thoughts about how to incorporate that into an envelope system?

  3. Megan 12/17/2011 at 11:12 am

    Hi Falwyn,

    I have a lot of family in small towns and they do most of there shopping online. I do A LOT of my own shopping online, mostly because I don’t like waiting in line. The envelope systems works really well if you are dedicated to it. When I first tried the Envelope system, I would put my recipes in the envelope when I was done to make sure that I was in my budgeted amount. It was kind of a tally at then end to see how much we actually spent. Then we could adjust the amounts in each envelope. You could still incorporate the envelope system with your online purchases. If you know what sites you shop on and how much you spend on them, then you can figure out how much to put in your envelope for that item.
    I hope this helps.

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