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Budgeting for Kids

What do your kids do with their money? Budgeting for kids is an important lifelong lesson parents need to teach them so they can be responsible adults.

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Having finance lessons with your kids isn’t one of the things you think about when you have little babies, but they grow up fast and become little people that like to spend money and it’s easy to put together a kid’s budget!

This is the last part in a 4 part series on children and money.  You can read the first 3 posts, too!

As parents, we all want our children to grow up as financially responsible adults. One of the best ways to instill this value is to teach them budgeting skills early in life. Budgeting helps kids learn important financial skills such as saving money, setting financial goals, and making informed spending decisions.

white piggy bank with gold coins in the air

Budgeting for Kids

Budgeting can teach kids the value of money and the hard work required to earn it. When kids understand how much things cost and how much they have to save to afford them, they become more mindful of their spending.

Save Some for the Future

First, as a parent, you’ll want to provide tips for setting savings goals and sticking to them. Opening up a savings account at your local bank is an easy way to help them save. We talk to them about what they want to save for, a skateboard ramp or Nerf gun. My older son went to Nicaragua on a mission trip and we told him if he wanted to go back he had to help pay for the second trip. He is using his money and a savings account to make that happen. A piggy bank is great for younger kids. My daughter has a bank similar to the dinosaur bank and she loves it!

It’s also important to save money for emergencies or future expenses. This can be hard for younger children to understand but older kids need to learn this too. My son’s Xbox broke and he had to pay to get it repaired. Luckily, he had been saving for a rainy day.

UPDATE- My kids are teens now and my oldest is a senior in high school now! I can’t believe it. My husband and I decided he is responsible for purchasing his own computer for college. He’s gotten a job and his savings account is growing to pay for this future expense.

Teach your children the benefits of compound interest and how it can help kids grow their savings over time.

blong girls with pen and paer and piggy bank working on her budget

Spend Some on Wants

It’s important to balance saving with spending. This is the fun part! We call this wallet money in our house and it can be spent on anything they want. We go to a lot of baseball games for my older son and I don’t buy candy at the consession stand, but they have money if they want a special treat. My daughter loves The Dollar Tree. She can buy anything in the store and she spends a lot of time picking out what she’s going to get.  Each of our kids has their own wallet and is responsible for their own money.  Here’s the one my daughter has.  It’s really cute!

Encourage kids to spend some of their allowance on things that they want and not just needs. My daughter loves fancy school supplies, but I push her to spend her money on fun things too, like records for her record player or bath bombs.

You’ll want to give them tips for budgeting and making wise purchasing decisions and not let them go crazy. I tell them if I think something is too expensive or help the decision between two different purchases.

Once you have older teens, teaching them to save money for a purchase instead of using credit cards should be a priority. Since kids don’t have an income this should be a priority in financial education. Credit cards aren’t loaning out money for free!

Give Some to Charity

Explain the benefits of donating money to a charity or cause that kids care about. I know that my kids want to help everyone they meet. Through charitable activities, kids learn to appreciate the struggles of others, and they become more empathetic to their needs.

Encourage kids to research and choose a charity that aligns with their values. I think this is the fun part. This is where your kids can choose what they’re interested in and how they want to help.

Parents can use strategies such as setting a savings goal, encouraging kids to save, making a budget together, and teaching kids about money management to make it fun and engaging for their children. By instilling these values in their children, parents can help create a financially responsible future generation.