Teaching Kids How to Budget Money
Teaching kids how to budget money is one of the great challenges of
financially educating children. Let's face it, budgeting is even
hard for most adults because we are able to live beyond our means so
easily. If you want to be successful in teaching your kids to
budget, you have to at least make it appear you are doing the same
thing. Fortunately, there are a few shortcuts and clever tactics
other parents have used in the past which have been proven to make
this process easier. You can teach kids how to work for cash and how
to save it, but that’s not much use without the essential skill of
knowing when to spend it and on what. That’s where the budget comes
Teach kids money skills through our Money Worksheets and Game Unit
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Why Kids Hate Budgets
Try to think back for a moment to when you were a kid, and you’ll
get a glimpse into why budgeting is such a tough concept for
youngsters. They may understand the idea in theory, but the constant
attraction of everything that’s happening right now is enough to
overcome any desire to put money aside for the long term. This is
especially true in this day and age, when attention spans are
shorter than ever and increasingly clever advertising often targets
kids directly. Patience isn't something that comes naturally to kids
and having to wait for something they want right now can be very
frustrating to them.
So this is what you’re up against when you try to teach budgeting –
but don’t despair. There are a few principles working in your favor.
How to Budget Money-Long Term Goal Planning
It’s a simple fact of life that many things worth having or doing
require long term planning to acquire or achieve. This applies to
kids just as much as adults. If you have a tendency to make big
purchases for your kids for no real reason, you’re doing a great
deal of harm to their financial education. In the real world, the
things they want aren’t going to just fall out of the sky – but if
you buy them whatever they want on a whim, that’s what they’ll come
You need to introduce the concept of long-term goal planning. This
is the motivating fuel that will help kids stick to a budget. There
has to be real consequences for not sticking to the budget, just as
there are in the real world. If they fail to save for concert
tickets, they don’t get to go – there are no bail-outs. This may be
tough at first, but you have to stick to your guns.
Be Open About Your Budget
Some parents teach kids how to budget money as an abstract concept,
while keeping their own household budgets a secret. You’re better to
be open about your own budget so the kids can see how the knowledge
applies to a real-world scenario on a day to day basis.
Learn more about a family
Leave Room for Luxuries in your Budget
This is one of the absolute keys to a successful long-term budget –
it must not be all work and no play. Your kids must leave room for a
few luxuries and fun items in the short term, otherwise they’ll end
up getting frustrated and tapping out of the budget before they
reach their goal. Every budget needs to leave some breathing room –
few people have the self-discipline to go without any luxuries for a
long period of time purely by choice.
Teach Other Important Lessons
Explain to your teenaged children that learning how to budget money,
and doing so successfully, is one of the qualities that even the
most successful people achieve. Provide examples about how lottery
winners, actors, and athletes often find themselves in financial
difficulty because they failed to learn this skill, even though they
make more much more than most of us ever will.
Provide examples of successful businessmen and women who seem to
keep more of their finances intact, and then explain that one of the
things that got them where they are is successfully learning how to
budget money. Even those who make millions of dollars a year should
learn to budget if they want to hold on to their wealth.
Learning how to budget money properly is the main reason why so many
college kids find themselves involved in financial crises such as
deep credit card debt and high amounts of school loans.
By parents consistently teaching financial lessons to children
before they go off to college, twenty-somethings may not find
themselves having to file bankruptcy before they are 30 years old.
One way to begin showing kids how to budget is to suggest to them
that out of every dollar they get for their allowance, they should
save 10% of it, invest 10% if possible, give 10% to a charity or
non-profit organization and keep the rest for them.
Try using this free
budget worksheet for planning.
Here is a Family
See details on our Teaching
Kids about Money Ebook
for more lessons on banking, checking
accounts and credit cards as well as more money
designed to teach kids basic concepts and using cash
in everyday life.