› Budgeting

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 in.



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 to expect.

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.

mom and son studying

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 budget.

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.
budget worksheet


Here is a Family Budget Worksheet.

family budget worksheet


teaching kids about money ebook

See details on our Teaching Kids about Money Ebook for more lessons on banking, checking accounts and credit cards as well as more money lesson plans designed to teach kids basic concepts and using cash in everyday life.









Join Kids and Money!