It can be hard to find ways to teach your kids about money, but a good financial education can help your kids in later life. Our CBI analysis reveals that 40% of adults who didn't receive financial education said they have no savings, showing just how important it is to learn these lessons early on in life. With a lot of kids earning pocket money from as young as six, it's never too soon to teach your child how to budget.
GoHenry's Money Missions are an ideal resource to help them learn on their own, but there are also fun ways you can help teach budgeting to your kids. It's worth remembering that every kid learns in a different way, so you should combine the ideas below with other methods you have for teaching your kids.
Fun ways to teach kids about creating a budget
Talking about money can seem dull for children, so it's great to find fun ways to look at creating a budget. First thing is to talk about why we make budgets - that we have finite amounts of money and have lots of things we want or need to buy.
A lot of kids really enjoy visual learning, so you can use beads or other counters to represent money. Say that the beads represent income. Then, label jars or bowls as different expenses or outgoings. Depending on the age of your child you might want to keep this quite simple and have 'rent' 'bills', 'food', 'savings' and 'fun money'. If your child is older, you might want to have a more detailed breakdown of what expenses you have.
You can then teach your child about budget priorities following the principle of 'needs, savings, wants'- make them put the right amount into any jars for required expenses first, such as rent and bills. Then let them put some into savings. Then let them put the remainder into the fun money. This is a great time to teach them about the 50-30-20 rule, meaning that 50% of the money should go on needs, 30% on wants, and 20% on savings.
It's also important to teach your kids about one-off expenses and recurring expenses. For this, you could use fake money or other tokens with different values. Give your children the same amount each time, and say that one month you have only regular expenses and let them make their budget. Next time, say you have to make a one-off purchase like replacing an appliance. Ask how they'd budget it. You can also show how some expenses are fixed, but some vary over time, so give your child a different cost for different scenarios.
There are also a lot of great money games for kids that can help them learn how to make budgets at GoHenry.
Fun ways to teach kids about changing budgets
Going further than just teaching your kids about one-off expenses, you can also teach children how to change their budget. A fun way to do this is to get your kid to make a budget, as mentioned above, and then add something unexpected - put some scenarios on pieces of paper and put them in a hat. Ask your child to draw one. You can include all kinds of scenarios - everything from a bonus at work to job loss, as well as familiar responsibilities, education costs, buying a car, and more.
Your kid will love adding the element of chance into the game, and you can help them see how to change their budget - including where to cut back or what to do with an unexpected windfall. You can even make this into a simple game where every month that they successfully budget gets them closer to winning - let them win after 12 successful months, and give them a small reward.
You can even change the costs of things as time goes on to represent how household bills often increase. This can be done at random with dice - decide which number on the dice increases a certain bill. Making it into a game can really help your kids engage with budgeting.
If you've got quite young children, it might help to give them some ideas to pick from. Each time the budget changes, write down some ideas - make sure one or two will help them change their budget, plus have some that will make things harder, and some that are fun but silly. Ask them to pick which ones will work, and give them a score for how many they get right.
Fun ways to teach kids about budgeting to save
This is probably the part of budgeting that most interests kids since it's how they learn to save up for something fun. The first step is to ask your kid what they want to save up for - this will make them far more invested in learning to budget.
Give them a set number of tokens, and write some expenses on pieces of paper. You can then ask how much they want to save by the end. To start the game, pick one of the expenses at random. Ask them if it is a need or a want. If it's a want, ask them whether or not they would buy it. You can even have multiple options - like cooking a meal vs buying a takeaway. They'll start to learn quite quickly what things they'd cut out to reach their saving goal.
Remember, most kids will make mistakes and fail to budget properly, but that's fine. This is a safe way for them to learn from those mistakes. You can teach them how a budget has to be balanced, as well as ways that they can reduce their expenses - teach them that cooking is cheaper than a takeaway, or that second-hand clothes are cheaper than new clothes, and let them try again to get through all the cards.
This is also a great time to help your kids remember the 50-30-20 rule for spending, and it can help them rethink what's necessary and what's optional.
As a real-world way to explore this, you can give your kids a small weekly budget and ask what snacks they want at the shop. This helps them see how purchases affect their finances, and if you do it over several weeks you can get them to add up their expenses to track their spending habits over time.
There are also loads of great money apps for kids that can help teach your kids how to save.
Start great financial habits with GoHenry
Our in-app Money Missions can help your kids learn about budgeting. Money Missions are fun bite-sized lessons for every age, with the lessons tailored to your kid's age and understanding. Your kids can learn all about budgets & plans, saving habits, and spending wisely - all vital for knowing how to budget in the future. They can also learn about borrowing and investing, ready for when they are an adult.