How To Get Started with Basic Budgeting

How To Get Started with Basic Budgeting

Budgeting is an essential skill that your kid can use for the rest of their life. But how do you teach budgeting for kids? Many parents struggle to start the conversation and need simple ways to show their children how to budget. Teaching young kids how to budget seems daunting, but you can start with a few basic steps to build the skills kids need to manage money wisely.

What is a budget?

When you break down a budget for kids, it’s really just a plan for what to do with their money. A budget for kids accounts for their income or allowance and shows how they plan to spend or save it. You can explain to your child how to budget for their needs and wants, which can help them plan for more complicated expenses in the future.

Why is budgeting for kids important?

Teaching kids how to budget builds foundational money management skills they can practice as they age. A simple budget is a great way to start preparing kids for bigger responsibilities like a kids debit card or monthly bills. It can teach the difference between needs and wants and how to plan for both. Budgeting for kids also introduces essential life lessons like patience, planning ahead, and smart decision-making. These skills can build good money habits, but they’ll also help your child in every area of life.

Teaching your kid how to start their first budget

A simple way to start a budget with your child is to make three basic categories: save, share, and spend. Show your child how to figure out their income, whether from an allowance, chores, a job, or gifts. Then, show kids how to make a plan for what they want to do with their money.

  • Save: Start a savings habit early by encouraging kids to save for something they really want. Build up to bigger savings goals as they learn and age. 
  • Share: Your child can donate to a favorite cause or give to charity with their budget to build empathy and encourage kindness. 
  • Spend: Teach kids how to plan for any expenses or bills, which can help your child prepare for living on their own someday. Spending also accounts for any toys, games, clothes, or money to spend out with friends. 

As kids become more familiar with how to budget and more motivated to save, you can encourage kids to save more money, use a kids debit card, and even invest for their future.

Tips for success

When learning how to budget, keep kids interested by using examples from their favorite Disney characters, watching money videos on social media, and talking about money goals your kid cares about. Get kids involved in making a household budget like a grocery shopping plan. Start small, and teach budgeting for kids in fun, engaging ways as they age. 

 

Giving kids access to financial education early on can help them develop money skills and knowledge that will help them make smarter choices as they get older.

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Written by Kristin Yarbrough Published Jul 17, 2022 ● 3 min. read