Budgeting for Kids

Personal Finances Series – Kids Edition

TLDR

The goal: Make kids feel empowered about money management, not restricted by it.

• Kids often resist budgeting due to fear of losing things and feeling powerless
• Success comes from making it positive and age-appropriate:
  • Ages 3-6: Visual tools, counting games, simple rewards
  • Ages 7-12: Start allowance, savings accounts, family goal discussions
  • Teens: Give budget leadership roles, connect to their future goals
• Avoid pitfalls like forcing participation or creating money anxiety
• Success signs: Kids initiating money talks, showing pride, and sharing with others
• Keep it consistent but flexible, and always celebrate wins

Why Kids May Resist Budgeting

You and your spouse have started your budgeting journey. You’ve fought it out and figured out your budget template, your goals, and discussed everything in between. There’s just one minor thing left to do. Tell the kids. It doesn’t have to be as scary as it may seem - but you do want to put some consideration into how to bring up the topic, not only to make any transitions they will face easier, but to also help their lives by establishing healthy financial structures and understanding. The initial reactions parents fear is the resistance. Lets look at some common reasons kids resist budgeting:

• Fear of losing things they enjoy

• They don’t understand the “why” behind the changes / Worry about the families financial situation

• Feeling powerless in the decision making

• Peer pressure with their friends

You want to be able to handle their resistance positively. In the same way you had to work through solving problems and concerns with your partner, it is time to give your children the same time and attention with this topic (check out my blog Why is Personal Finance Dependent Upon Your Behavior?)

• Listen to their concerns, do not demean their requests - try to find compromises

• Focus their attention on what they have the potential to gain, not what they are losing

• Never use guilt or fear

• Try to keep things light and fun

Age Specific Practical Implementation Steps

That all sounds good but how do you actually implement it, in a way that’s light, fun, and exciting for your children to be a part of? In general, you’ll want to remember to start with small, achievable goals. We mention saving $10 in groceries - make that feel like a big win to build their confidence, and slowly progress with these little excersises. Keep in mind that at any age the goal is to connect budgeting to things they care about. This can look like saving for a video game or a build a bear, funding their hobbies, planning their birthday parties, saving for their first car, etc. Let’s dive into some age appropriate examples of getting them involved:

Ages 3-6

• Use clear visual systems to help them understand what budgeting is. It can be as simple as having clear jars for savings, giving, and spending, as a fun way to also track your progress

• Make shopping a learning game, (We have $10 to spend on anything you want, can you help me count $10?) - practice counting and money recognition. Think of fun ways to involve them - “Who can find the best deals this week?” or “Can we beat last months grocery savings?”

• Start conversations around wants vs needs. Connect budgeting to rewards - “you got to pick this $10 toy because you helped us save $10 in groceries!”

Ages 7-12

• Consider introducing a basic allowance system tied to chores or other tasks. Tie this in with tracking the money they earn on their own budget!

• Help them open their first savings account - allow them to feel the money they’ve earned is truly theirs

• Start discussing some of your families financial goals at a level thats appropriate for their age/understanding. As your family starts to see wins, share the success with them, including how budgeting made it possible

Teens+

• Begin including them in some family budgeting discussions, look at giving them power to lead certain budget buckets (family fun money) and present a report out at the end of the month on performance

• Begin teaching about debit cards, and saving for larger purchases

• Introduce concepts like long term savings and emergency funds

• Connect budgeting to their future goals - whether it be college, buying their first car, starting their first business, etc.

As you are recognizing, this is an endeavor that will take a good bit of your time and consistency. Don’t lose all the effort your putting in by getting trapped in a pitfall. Some pitfalls you want to make sure to avoid:

• Avoid making budgeting feel like a punishment; this also means don’t force participation

• Determine how you want to share spending mistakes. It’s ok to show you’ve made mistakes and take them on the journey with you on how your solving the mistake, but keep it as positive as possible

• Don’t compare siblings - this goes without saying, but particularly in comparing their money management.

• Avoid creating anxiety about money, this can be tough to navigate but know that this starts first and foremost with you and the energy you bring to budgeting as well

Success and Making it Stick

You’ve done all this work to get them involved, but how do you know whether it’s actually working or not? You should see your kids excited about the idea of budgeting and money - are they initiating discussions about it, and coming to you with money saving ideas? Do they take pride in their contributions? Are they participating in the budgeting activities you come up with, and are they sharing it with their friends and family? These are some easy and clear signs they are enjoying the journey and you’re efforts are proving successful.

How do you keep it going? The same way you should be checking your budget weekly, you want to provide your children consistency in the topic as well, make it a consistent part of your families routines. However, feel free to keep it flexible. You don’t check your budget every Saturday at 12pm on the dot, allow your kids the same flexibility you give yourself. Allow for things to keep evolving, especially as your children grow up, evolve into new responsibilities and opportunities for them. Most importantly - stay positive and solution focused, and keep celebrating even the smallest wins.

Your goal isn’t just to teach your children about budgeting, in the same way it’s not your goal to only budget. You want to feel empowered and excited about the opportunities that arise from managing your money wisely - the same goal applies for your children. When they feel ownership and see the benefits, they get to feel empowered and excited, leaving them more likely to embrace budgeting as a positive life skill over being a restriction.

As always, if you’re having a hard time navigating any aspect of your financial journey, feel free to reach out to me, through Calendly, to book a free consultation to discuss how I may be able to help. Click here to check my availability on Calendly.