Budgeting for kids: Fun ways to teach budgeting to kids

Budgeting for kids: Fun ways to teach budgeting to kids

Budgeting. It’s a skill that’ll put your kids in control of their money and help set them up for a financially healthy adulthood. And as money habits are set by the age of seven, the sooner your kids learn to budget, the better. 


The good news is, teaching your kids about budgeting doesn’t have to be dull. There are lots of fun ways to help them learn. Keep reading for tips on explaining to children how to budget, games and activities to practise budgeting, and more. 


Related: Financial literacy for kids


What is budgeting? 

Budgeting is a fancy word for money planning. A budget is a plan that helps you track every dollar you have coming in (your income) and every dollar going out (your expenses).


When you budget, whether it’s every week, month, or for a special event, you’re in control of your finances. Basically, you’re telling your money where to go. Without a budget, you may find yourself wondering where it went. 

Why it's important to teach your kids budgeting

Teaching your kids about money and budgeting puts them in control of their money from a young age. It helps them understand money is not unlimited. And because of that, they need to make choices about how they spend and save based on what they have. 


Budgeting is a valuable skill to learn young, before juggling household bills and mortgage repayments on a salary as an adult. Kids who budget are less likely to land themselves in debt later in life.


“Budgeting is an essential skill kids will use throughout their lives. It’s not just about money. Budgeting also introduces life lessons like patience, planning ahead, smart decision-making and sharing,” explains Beth Zemble, GoHenry’s VP of Education. “By teaching your kids how to budget for savings, needs and wants from an early age, you’re setting them up for good financial behaviours later in life.”

How to explain budgeting simply to kids

The simplest way to explain budgeting to your child is a plan that helps them get more from their money. A budget will show them exactly what they have available to spend and help them reach savings goals sooner. 


If your child struggles to make their pocket money last all week, discuss how creating a budget will help them ensure they have enough to cover their needs and wants. And means they won’t run out of money unexpectedly.  


Adults have to budget for the same reason, you could say. Even the Chancellor of the Exchequer has to create a budget and submit it to parliament.


Your kids might find the idea of budgeting easier to grasp if you show rather than tell. 

Show your kids how you budget

To show your kids how budgeting works, have them sit alongside you when you next sit down to balance yours and go through it together. Or use a bank statement to show them your monthly outgoings. 


Explain how you must ensure you have enough money for household bills like heating and lighting. But you also need to cover essentials like food and petrol. 


Discuss how much is left over for spending on meals out or day trips. Then explore how much you can set aside each month for a long-term savings goal, like a new car or a holiday. 


You might want to talk with your kids about what happens when you don’t have enough in your budget for essentials too. It’ll be an opportunity to answer questions kids ask about money, like debt and interest


But as kids learn best by doing, here are some other ways to help them learn.


Related: Best budgeting apps for kids, Budgeting tips for families, How to create a family budget


Ways to teach kids about budgeting

It can be hard to find ways to teach your kids about money. But as a lot of children earn pocket money from as young as six, it’s never too soon to teach your kids to budget. Even children as young as three can grasp the basics. 

A sweet budget

Give a young child a set amount of money to spend on sweets. Let them decide whether to blow their budget on one large chocolate bar all at once or buy several smaller packets of sweets throughout the week that will last them longer.

Play budgeting games 

There are lots of budgeting games you can use to teach your kids about budgeting. A fun one is to use beads or counters. Say the beads represent income, then label jars or bowls as different expenses or outgoings. Keep it simple for younger kids ‘rent’, ‘food’, ‘savings’ and ‘fun money’. 


Make them put the right amount into jars for needs, then savings. Then let them add the remainder into the fun money jar. For older children, use it as an opportunity to teach them the 50-30-20 rule. (50% needs, 30% wants and 20% savings.)


To teach your kids how to change their budget, add something unexpected. Put some scenarios on pieces of paper, an unexpected money gift, or a sudden present for a friend and get your child to draw up a new budget. Help them see where to cut back and what to do with an unexpected windfall. 

Manage the grocery shopping budget

Put your child in charge of the weekly grocery shopping budget. Help them make a list of food they need and price-check it in the supermarket. Get them to add it all up and see if the total is within budget. 

Budget for a special event

If you have a family day out coming up, put your child in control of the budget. Check they’ve included the cost of parking, petrol, tickets and meals. 


Or if you’re saving for a holiday, get them involved. Tell them how much you’ve saved and what else you need to budget for. See if they can find ways to make some extra money to help you reach your savings goal. 

Manage pocket money

Pocket money is a great way to teach kids about budgeting. Each week they’ll have a set amount of money to work with. They decide where it goes and how best to make it last. For older kids, a monthly allowance will help them learn to stretch their budget for longer periods. 


If you decide to pay your kids for doing extra chores, they’ll be able to boost their earnings. It’ll help them grasp the relationship between work and money too. 

Save/spend/give envelopes 

Give your kids three envelopes named Spend, Save, and Give. You could get your kids to decorate the envelopes any way they like. Every time they get their allowance, get them to divide it between the envelopes. 


Let’s say their allowance is five pounds per week. On the day they get paid, they put two pounds in the Spend envelope, two in Save, and the rest in the one marked Give. It’s basic, but it works even for six-year-olds. 

Save/spend/give jars

Younger kids may get more out of dividing their money between jars. It’s the same principle; it just means they can see their money mount up. So they’ll always know how much they have. 


Make it a simple system. A jar for making cheaper purchases, like sweets or small toys. Plus, another, bigger jar, for treats they can’t afford right now, such as trainers or games. 

Use a budget worksheet or template

Your kids may roll their eyes at this one. But for some, having a way to organise their figures into ready-made columns seriously appeals. It doesn’t have to be a complicated online spreadsheet with formulae (although tech-savvy teens who are good at maths may enjoy this). A simple template you can download and help your child fill in is all you need. 

Introduce them to a kids’ money-management app

GoHenry’s in-app Money Missions tool is a great way for your kids to learn about budgeting. There are videos, bite-sized lessons, interactive games and quizzes for every age. As well as budgeting, they’ll learn other useful money skills like saving, investing and spending wisely. 

7 tips to help kids create their first budget

Budgeting sounds complicated, but it’s actually pretty straightforward. Here are some tips to help your kids make their first budget. And a video you could watch together before you get started.



1. Work out their income

The first step is to get your child to work out how much money they have coming in over a certain period, like a week or month. Explain this is called ‘income’ and, depending on their age, might include

  • Pocket money

  • Money earned for doing chores

  • Earnings from a part-time job or side-hustle

  • Money from the Tooth Fairy

  • Gifts from relatives.

Help them add this up and write down the total figure. 

2. Identify the fixed costs

The next step is to help them work out their expenses. Tweens and teens may not have rent or household bills to pay, but they might have gaming subscriptions,  Spotify or Netflix subscriptions, or a monthly mobile phone payment. 


You want to get your kids to understand that they may have fixed costs for which they know the date and amount in advance. And these need to be added up and deducted from their income. 


Get them to write down the total amount of fixed expenses they have.


3. Decide their needs vs wants

To help your kids work out their other expenses, discuss the difference between needs and wants. You could use your weekly grocery shop as an example. Explain how your grocery budget may always include staples such as milk and bread (needs) but only occasionally include a special treat such as your kid's favourite snack (want).


Children of all ages can understand the difference between needs, like shelter and clothing, and wants, like a new gaming console, a holiday or a streaming subscription.


Once your child has calculated what they need for the upcoming period, they add this to their expenses total. 

4. Allocate savings and donations

Explain that the general rule is to save at least 10% of your income. The amount your child wants to contribute to their savings should also be added to their expenses for the upcoming period.


If your child is working to meet a specific savings goal, they may want to increase the savings percentage to reach their goal quicker. Guiding your child to save up for their own goal will help teach them a valuable life skill, how to delay gratification. 

5. Add donations to charity

If your family chooses to give to charity, encourage your child to give too. Developing this practice early can help your children grow into caring, empathetic adults. The amount your child gives to charity also goes into the expenses column of their budget.  

6. Help them figure out what’s left to spend on wants 

To work out how much money your child will have left to spend, they simply deduct their total expenses from their total income. 


Then, throughout the budgeting period, remind them to track every transaction they make. 


Related: Ways to manage your child's spending, Track your child's spending

7. Help them work toward long-term savings goals

When your child has developed a basic budget, challenge them to stick to it for a few months until they reach their short-term savings goal. Then you can revisit and discuss any changes they might want to make.


Maybe you start working with them on some longer-term goals like a car or college fund. By developing the discipline to save at a young age, your children can set themselves up for future success.

How can GoHenry help your child learn to budget?

A prepaid kids debit card and app for 6-18-year-olds, GoHenry can help your child learn budgeting skills that’ll set them up for life. Aside from tracking their daily and weekly spending, they can set up saving pots, give to charity and manage their spending on the go.

The app also comes with Money Missions, which is designed to help teach your child more about money management and financial literacy.  Use the individual mission on budgeting to help with budgeting on the app.





Related articles

Activities to teach your child financial literacy 

Teach kids the value of money

Needs vs wants

What is saving and why is it important for kids

Teaching delayed gratification to kids

Written by GoHenry Published Mar 9, 2023 ● 3 min. read