KIDS & CASH: JOT IT DOWN

So you’ve been through a lot with your kids – developed S.M.A.R.T. financial goals, created a money plan and even a budget. Now is the time for the final step in turning your children’s dreams into a reality. It’s time to teach them on how to track their spending! But, before you teach your kids on how to do it, lets start with yourself first.

Tracking your spending is more than just trying to stick to your budget. It is in fact, one of the best ways to improve your finances! That is to say, keeping a record of the things that you spend on everyday – from groceries to luxuries– will let you see exactly where the money is going. Now, we’re quite certain that you will be asking yourselves the following questions:

Why should I track my expenses?
Of course you may say that although the cents do add up, nobody makes or breaks their finances with the little indulgences here and there, be it an RM2.50 for a chocolate bar or splurging on the name-brand facial tissues. Well, even though they aren’t the expenses that burn holes into your pockets, they are in fact the expenses that make it hard for you to accumulate your savings, which is pivotal in achieving your financial goals.

Furthermore, if you’ve never tracked down your spending in the past, you will have no idea how much money you want to spend, where it goes, and how fast it goes! So, once you start to track your spending, you will discover that there are things (and people) that you spend a rather significant amount of money on without even realising it. It could be that daily cup of coffee you need to get the day started at Starbucks, that nice shirt or blouse from that rather “affordable” designer store, or even those little toys and knickknacks you habitually buy for your kids, or yourselves.

Where do you start?
Simple, all you need to do is to track your daily expenses by developing some type of system to record everything you spend on a daily basis. It can be on a spreadsheet like Excel, a small notebook or you can even get the free templates online. Whatever system you choose, the single most crucial thing is to utilise the system. Choose one that fits your style and which will work best for you.

Now that we are done in teaching you on how to track your spending, don’t forget your kids. They are after all the primary focus here! For your little ones, we have a simple method which is called…

The Jot-it-Down Method!
This is a quick and simple method your kids can easily use to track their spending. Guide them in making a simple carry-around spending list from a sheet of A4 paper by following the steps below:

1. Fold an A4 paper in half lengthwise
2. Fold the paper in half two more times
3. Unfold the paper to reveal eight evenly distributed sections
4. Write the day of each week above the first seven sections starting from the top left section
5. On the last section at the bottom, record the total spending for that week

Let’s go through the sample below to get a better idea of what your kids will do in the weeks to come:

Example: Johan’s Jot-it-Down Sheet

What you see here is Johan’s Jot-it-Down sheet. Everyday Johan goes to school with a daily allowance of RM2.00. During recess on Monday, after picking out and paying for the food and drinks he wants, he takes out his Jot-it-Down Sheet and records his spending (RM1.00). Any extra money is written down as “saving” (RM1.00). He does this every day and at the end of the week he will total up the amount saved. In the sample above, Johan has managed to save RM2.90 for the week.

Now, imagine if your kids follow Johan’s footsteps and are able to save a few Ringgit every single week; or in Johan’s case almost RM12 a month. That might not sound like a lot of money to you, but to them, it’s as much as gold! Just do this for a few more months and your kids will be able to buy their first toy using their own money – and less of yours!

Reminders and suggestions
As your kids track their spending – and as you track yours – please remember to not judge yourself too harshly, or feel guilty about the money that you have spent. This exercise is to make yourself aware of where the money is going, so that you can begin making adjustments and improvements as necessary. As for your kids, this exercise will help them in sticking to their budget, meet their goals stated in their money plan and at the same time nurturing saving habits at very young age!

In addition, there is no right or wrong way to keep a log of your spending. If you find one particular way does not work for you, continue trying until you find a system that works. So find a way that fits your lifestyle. This applies to your kids as well. Computer-savvy kids may naturally prefer using Excel worksheets over a sheet of A4 paper. Don’t inhibit their creativity in devising ways to track their spending.

Finally, we give this advice at the end of every article: Don’t fret with this entire track your spending thing. Have fun and enjoy yourself a little! Get the whole family involved in making not only your kids’ dreams a reality, but yours as well!