Another phase of family budgeting - and important, too - is the creation of "allowances" for children. Some families are free and loose about children's allowances. Others play it tight and hold the kids accountable for every dime. Both ways work.
Psychologists and educators point out that there are no hard-and-fast rules. Any sensible approach is good if it is in line with the family's income and mode of living and is followed consistently. "Trouble comes when the allowance is hit-or-miss," says a top London child psychologist. He adds: "What's really important to understand is that your attitude toward money rubs off on the kids. They'll tend to do with pennies or a pound what you do on a bigger scale."
A Connecticut educator and psychologist who specializes in teen-age problems notes that "a parent's feeling of confidence about money is soaked up by the kids very early - or the parent's feeling of fear and doubt."
A small child should be given a dime or so once or twice a week but never more money than can be managed easily. By 10 the child should be getting a regular weekly amount of pocket money - maybe £1 or a bit more - to provide some spending options. The habit of saving requires some excess cash that makes it possible.
Pre-teenagers, say psychologists, develop confidence by having more money in hand, but it should still be on a weekly basis. Starting at 13 or 14, a monthly allowance should teach the youngster something about budgeting. But here the advice comes full circle: The parents' spending habits are what the kids really look at.
By 15 or 16, the child should have at least some idea of family finances, though too much information may be worse than too little. "Give them a clear, honest understanding if they question you," says a Harvard University psychologist. "But don't make a big thing of it. Don't impart anxiety by forcing the issue."
An obvious blunder at any age is to give a youngster more than friends get. "He should be in line with his peers," says a specialist. "If he gets too much, he may waste it and feel guilty about it in the bargain." Giving too little in the hopes of instilling a sense of frugality is equally bad.
At the heart of any parent's budget is the provision that's made for school financing - or so it should be. The numbers in pounds are alarming.
The average basic cost of four years at a state university, about £6,700 today, will reach £9,000 by 2008 and nearly £12,000 by 2013. For the average private school, the jump will be from today's £14,000 to £20,000 in 2008 and £26,000 in 2013. Putting three children through school over the next 10 years could cost £75,000 - or more for the top Eastern schools.
Except for buying a home, school bills will be the biggest single expense for most families. Without careful long-range planning,... see: Coping With Steep school Costs