The Homeschool Resource

• Budgeting is making a plan that tracks your income and expenses for a given period of time.

• Financial habits developed during childhood and through adolescence greatly influence financial behavior in adulthood.

• Teaching children good financial habits through worksheets, games, apps, online resources, real-world scenario projects, and hands-on activities will help reinforce those positive financial behaviors that they will then carry on into their future.

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Budgeting is making a plan for where your money will go. It is an important subject matter to teach children. Financial habits developed during childhood and through adolescence greatly influence financial behavior in adulthood. Starting at a young age, teaching your child good financial literacy and showing positive financial habits will benefit your child throughout their lives.

Why Teach Budgeting to Children

Budgeting, as part of financial literacy, is an important topic for children of all ages. Teaching kids about money helps prepare them for bigger financial responsibilities that they must deal with in adulthood. It also helps them to understand that money is not infinite. Therefore, they will need to make choices as to how to use their money. Learning good financial habits from a young age will benefit your kids throughout their lives.

How to Teach Budgeting to Elementary Aged Students

It is not uncommon to start teaching children about money as early as preK. Even those who are 3 or 4 years old can grasp ideas such as counting paper and coin money. PreK and Kindergarten children can recognize that it costs money to buy things at the store. Once your child starts to learn about money and how to count it, you can start to gradually introduce more complex concepts. These concepts can include ideas such as saving, spending, and how to budget. Here are a few ways you can help your child learn about budgeting and good money habits.

• Physical money. While teaching your child the fundamentals about money, make sure that you show them physical examples. Early elementary students start to learn about the different paper bills and the amount of worth of each coin. There are great money worksheets to use to teach them such as these from k5learning. However, you should also let them see and feel actual money. Not only will the lessons be better received, but they will have fun stacking and counting coins that you give them rather than paper copies. 
• Review the entirety of the job description. It is important to know the skills required and the responsibilities listed for the job that you are interviewing for. This will allow you to better answer their questions according to what skill sets will be needed for the job. It also gives you a good idea regarding what type of questions that you may want to ask about responsibilities and the workload of the position.
• Teach the difference between a need and a want. This is a major step in teaching financial literacy. It is important to teach your children how to differentiate between things that they need to live and things that they want to have. Start with simple ideas for young kids such as you need food and you want video games. Worksheets such as this one from education.com can help reinforce these ideas. As they get older, this helps to progress into how to budget by prioritizing  needed items and saving for wanted items.
• Teach patience. In today’s world, instant gratification can be seen everywhere; kids can access basically any show ever just by streaming and anything ordered online you can have at your front door within 24 hours. Teaching a little patience in the way of saving for things that they want to buy instead of settling for something that they can get immediately will help them make better financial decisions in the future.
• Make learning fun. When a child is having fun, the lessons learned are better retained. There are many ways to add some fun to a financial lesson. Set up a “store” throughout a room in your house and have your child “buy” items that they want. You can show prices on the items with sticky notes or just by telling them. For the money, you can use either play money or real money. To help them master making change, switch roles so that you are the customer, and they have to take your money and make change for you. If your child enjoys board games, Monopoly is a fun one to play to work on adding and subtracting money. The Game of Life is another great game to use as it simulates real-life financial scenarios.
• Mock party. A fun and engaging way to help your child simulate making financial choices is to have them plan for a mock party. For example, have them plan a mock birthday party. Give them a set amount of money that they can spend, a list of items with prices that they need to buy (a cake, drinks, pizza, etc.), and then a list of items with prices that they can choose to buy to make the party better (streamers, balloons, ice cream). Let them make choices as to how to spend the amount of money that they were given.

How to Teach Budgeting to Preteens and Teens

Once your child understands the basics of budgeting, they can move on to more in-depth concepts. These can include the 50-30-20 rule, introducing them to money-management apps, opening their own banking and savings accounts, and talking to them about what to do when mistakes are made. Here are some ideas:

• Giving an allowance. I understand that some families give their children weekly/monthly allowances while others do not. Some families give allowances for chores or for the kids spending their time helping around the house. And while I understand that some people do not see a reason to give allowances, it is a great way to teach kids about money and budgeting. When they have their own money to spend as they wish, they may think differently about what they spend that money on. For instance, my daughter will occasionally ask me to buy her a toy or a game from the store while we are out shopping. If I tell her that she can buy the item with her own money she will, more often than not, decide that that particular item is not what she wants to spend her limited funds on. So not only does having their own money make them more financially conscious, but being given an allowance for chores, will help them grasp the relationship between work and money.
• Set up a budget with them. For some hands-on experience, have your child sit down with you while you are creating a budget. This can be a simple grocery trip or something bigger like a vacation. Include them in everything such as the amount of money that can be spent and a list of necessities. Let them help you calculate how much will have to be spent and decide how to spend the extra funds together.
• Show them how to set savings goals. Let’s say that your child wants to buy the latest Nintendo game that is coming out. Sit down with your child and have them calculate exactly how much it will cost including tax and shipping (if being bought online). Then have them figure out how long it will take them to save that amount of money. Have them calculate in allowance money, money for chores, and gifts such as birthday or holiday money. Once they figure out how long it will take them to be able to fund their purchase, let them decide if they want to take on extra chores or offer car washes/dog walking to neighbors to get to their goal faster. While a video game may seem like a small savings venture, the same principles can be applied to larger purchases such as when your teen begins to go out into the workforce and wants to save up to buy a car.
• Teach the 50-30-20 rule. The 50-30-20 rule is a general budgeting strategy that states that 50% of your net income (income after tax) should be used for necessities, 30% should be used for things that you want, and 20% should be placed in savings. Now, while this is just a general rule, I feel that it really only applies to people who are well established in their careers , those who make a significant amount of money, or those who have relatively low living cost. Generally, for those just starting out on their own in the workforce, their necessities (or cost of living) will be 70-80% or more of their net income. However, this is still a nice concept to go over with your kids and one that they may be able to put into place if they start working while still living at home.
• Budget worksheets or templates. There are many monthly budget templates out there that can help your teen (or yourself) keep on top of their finances. This one from Addi Ganley includes a blank expenses column so that it can be customized to fit their needs, income and savings areas, and a space for notes. Having your child fill out a monthly budget sheet, whether printed from online or just set up as a google or excel spreadsheet, will help them see how much money that they have coming in and exactly where it all goes. For younger teens or those with no income or outgoing expenses, you can use one of these worksheets as a project for them. Have them research how much the median salary is for the job that they are working towards, or a job that interests them. Then let them research expenses for nearby apartments or houses as their “rent”. You can use your own experience and expenses to help them calculate categories such as electricity, water, cell phone, internet, insurance, and groceries. You can even let them look around at a car dealership website to get an estimate on a monthly payment for a car. Putting these items all together in a template to show how much money they will have coming in monthly and how much expenses will need to be taken from that. This will give them a better perspective of money and how to use it responsibly.
• Introduce them to a kid-friendly money-management app. There are apps for basically everything now; financial budgeting included. And there are some apps specifically designed to help kids learn financial responsibility. Some apps are set up for kids to use to keep track of the money that they receive and set up a savings goal. Others are more for parents to use to keep up with chores and allowances for their children but allow for the child to designate money to different “banks” for saving, spending, and donating. However, some of the apps are directly linked to a debit card or a debit account so be mindful if this is not something that you would want to do.
• Talk about dept. While dept is not something that you want your child to accrue, you need to explain what dept is and how credit cards and loans fit into the equation. And while not pleasant, you may want to talk to your child about what happens when their income does not cover their essential items such as groceries or bills. It opens an opportunity to talk about cutting back and how to get out of dept if they must rely on borrowing money from credit cards or bank loans. This can also include talks about student loans for older teens who are looking at colleges and universities.
• Let them know that making mistakes is okay. Everyone makes mistakes, financial mistakes included. So, if your child overspends their allowance or buys an expensive item and has buyers regret, let them know that it is okay to mess up sometimes. Use it as an opportunity to help them reflect on their choices and brainstorm strategies for how to make better choices in the future. Let them know that even adults make money mistakes and that those mistakes allow you to learn and grow.
• Celebrate your child’s budgeting success. Learning how to responsibly handle money can be hard, especially for kids and teens. Therefore, celebrate your child’s success, even if it is a small success. If they resist the urge to buy that pack of Pokemon cards because they want to save up to buy something else, tell them “Great job”. If they have finally saved up enough money to buy that video game, even though it took them 2 months longer than planned because they spent extra money elsewhere, praise their dedication. Showing them and telling them that you are proud of their hard work will reinforce those positive habits that they will then carry on into their future.

How to budget and save is an important part of financial literacy. It is an important part of your child’s future. Teaching young children how money works and how to use money wisely is a positive step that will greatly benefit them throughout their adult lives. Using a combination of age-specific worksheets, games, apps, online resources, real-world scenario projects, and hands-on activities will help your child grow and learn positive financial habits that they will use for the rest of their lives.   

<— If you are interested in a budgeting project for elementary aged students, here is a link to my Plan a Party – Budgeting for Kids project pages on TeachersPayTeachers.

I hope this offered some helpful ideas on how to teach your children about budgeting. If you found this blog helpful please consider subscribing and liking this post as it will help to grow the community as well as let me know which type of posts are more beneficial for you. If you are looking to teach your children how to prepare for an interview, check out my Life Lessons: Teaching Fire Safety blog.

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Have you started teaching your child about budgeting and financial literacy? If so, please share some ideas and tips with the community in the comments below.