How to Teach Your Kids to Budget
For this post only, I'm redefining budgeting as planned, thoughtful financial behavior. I titled the post, How to Teach Your Kids to Budget, because I know this common language will be understood well enough to give my thoughts a whirl.
As a parent, my goal is to connect their values and their choices. What that looks like depends on their age and whether they have their own money to practice with. That's why we provide our children with an allowance. It's a financial teaching tool.
They don't do chores to earn an allowance; they do chores because that's what family members do. And if they don't do them, or don't do them well, we ground them. All three of our kids had paying jobs outside the home, which made money conversations even easier.
Start the Conversation Where Kids Already Care
Don't lecture them. Wait for moments when money shows up naturally, or when stories relate to their lives. Then empower them to take part in, or own, their own financial decisions.
Elementary Age School-Age Children
When children are young, you can begin scaffolding money concepts into their lives through books. The Trump Administration cut the funding for the Money as You Grow Books to be sent to libraries, but you can still access the list to order on Amazon and download the free parent guides by clicking here.
Preteens
Take back-to-school shopping, for instance. When they're old enough to handle it, require them to write a list of required school supplies and any clothes they need. Hand them the cash you budgeted for back-to-school shopping, and let them choose what to buy, with one important caveat.
What they don't spend, they keep.
You've shifted the conversation from begging for new shoes they might not need to asking if they can thrift clothes to save money.
Teens and Young Adults
One of the coolest ideas I read about was in the book The Opposite of Spoiled. A parent pulled out his family's monthly income in cash. He dumped it on the kitchen table and asked the kids to guess where it went.
What followed was hours of conversation about their values, a better understanding of adult expenses, and gratitude for how much was being spent to make their lives better as kids.
Another powerful exercise is to have the kids plan a weekend family getaway. You provide the total budget. Their job is to plan the trip.
Games To Encourage Learning
As a former educator, I absolutely love the power of game-based learning. Games work because kids learn by doing. They can learn from expensive financial mistakes in a safe environment.
The free financial literacy games in the NGPF Arcade are the perfect place to start.
Think of game-based learning as a way to start a conversation. Games often spark curiosity and questions, and that's where parents can step in and help.
Related: Join our newsletter subscribers for ideas to manage money and the home as a team.
Perfect Podcast Episode to Learn More
Ron Lieber is the author of The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money, which was an instant New York Times and Wall Street Journal bestseller.
HarperCollins published The Price You Pay for College: An Entirely New Roadmap for the Biggest Financial Decision Your Family Will Ever Make in January 2021. Ron has been The New York Times “Your Money” columnist since 2008.
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