Budgeting for Kids – Tips for Every Age

budgeting for kids

Budgeting for kids is a valuable life lesson that will benefit them throughout their lives.  Like any parent, you’re always mindful of the things you teach your children. However, explaining money to a child may seem like a daunting task. There are a variety of approaches one can take when teaching their children the value of money, but what is best for your child specifically?  We’ve put together a list of useful ways to teach children to save at all age groups.

Here are useful and practical ways to begin teaching your children of all age groups how important it is to be mindful of how they spend and save their hard earned money:

Elementary Aged Kids

For your children in Elementary school, there are fun and engaging ways to start early with the art of saving money and spending it wisely. With this age group, as you know it’s important to make things interactive and exciting when it comes to learning opportunities! Here are a few ways you as the parent can jump in with them on this:

Set the example

Your kids take after you in a lot of ways, some more than you may realize. How you spend money on day-to-day things is something those little eyes pick up on. Perhaps there are easy and simple conversations to have in the checkout line at the grocery store. Explanations of why you use coupons so often, or how fun it is to have a store discount card and see your savings add up on the big screen. If you’re an avid discount seeker, make it exciting when you get your receipt that shows how much you’ve saved.

This could mean you and your children saving those receipts together and every month you pick which store gave you the best discount and why that’s so valuable. You could even add to those store trips and add the activity of finding the lowest discount for the items you need on the grocery list.

Explain the cost of certain items

As a young child, it’s very easy to assume that money is not an issue when wanting to buy something of interest. This is understandable, as you want your children to not have to worry about those things for quite some time. However, starting out early with small moments of value recognition can go a long way. For example, if there is an expensive toy or item they won’t stop asking you for, use that time to put into simple terms for them how much that toy actually costs. That purchase can be compared to a common household item you often buy. “If we bought that toy, it’d be like buying x amount of boxes of cereal… we may need to go with the cereal instead.” Framing those purchases into a perspective that is both understandable and easy to agree with.

Start putting money in labeled jars

A visual learning opportunity is often how younger kids can easily grasp a concept right in front of them. Not to mention, this can be a fun and engaging way for them to want to learn about money. An easy money project for kids is taking three jars and labeling them “savings”, “spending”, and “giving”.

Each time your child receives money (whether through chores, a birthday present, etc.), use that opportunity to have a conversation about which jar that money should go into. That way you’re having continued dialogue with them and teaching them the values in spreading out their money into different areas of spending. In your own life as an adult, these are likely the main areas you are already actively spending money in. A visual representation of those areas and how they are different from one another helps your kids to grasp spending concepts.

Middle School-Aged Kids  

Kids at this age are gaining their independence, this is a great age to teach children to save.  Here are some age-appropriate ways to incorporate these learning opportunities for them:

Have a variety of chores and rates to match them

Your middle schooler may be tasked with a handful of household chores they are responsible for week by week, and therefore they’re given some type of allowance in return. If so, this is the perfect opportunity for them to learn the responsibility of handling their own money. Depending on the chore list they have, assign different rates to different tasks. Cleaning their room or bathroom may earn them more than simply taking out the trash. This teaches them that when they work harder, they can earn more for those tasks. It also exemplifies the value of earning your money rather than having it just given to you.

Limit the amount of money you give them

Middle school can be the time when your kids start to venture out to the movies or to the mall with their friends, and mom or dad aren’t necessarily allowed to tag along anymore. This can turn into the classic “Hey mom, can I have $20 bucks to go to the movies!” Before you get your wallet out and hand it over, consider asking them if they really need as much as they’re asking for. It could result in the ever so common middle school eye roll or hefty sigh, but it makes them evaluate what they really need versus what they simply want.

High School Aged Kids

Around high school, your kids really start to gain their independence. Spending and saving money becomes a more central responsibility for your kids. High School is typically the time when your kids will start getting their first jobs, on top of their everyday chore list.  Here are some ways you can begin setting your high schooler up for success:

Getting their first job

If your kid has the ability to do so, when they are old enough it’s time for that first job. Not only will they learn the value of earning their own money, but they will also learn vital job skills and working with others. As the parent, you can be the one to drive them around and help them fill out those very first job applications. Not to mention the memory this will create together as you set them loose into the job world. Having their first job can open up new spending opportunities for them, like saving up for a down payment on their first car. There are new ways in which spending their own money on bigger ticket items can free you up as the parent from paying for those things.

Open a checking and savings account for them

As those first official paychecks begin rolling in, there’s no better way to make your kid feel confident about their hard earned money than having their own separate bank account. Under your own account, or on their own separate account they can manage, you can easily help them set up both a checking and savings area for them to place their money into. This can open the door for conversations about basic banking practices and the importance and woes of credit cards.

Include them in big spending decisions

This may sound a bit odd, but it could be impactful for you to sit down with your 17-year-old and include them in your next big family purchase? Of course, you will have the final say in that purchase, but it can be extremely valuable for them to listen to the way you discuss and approach larger purchases. The explanation of how important it is to decide between one car versus another, for example, will teach them how to approach their own everyday spending habits.

Their cell phone bill

Your high schooler likely has their own cell phone by now, and this can be a very relatable way for you to stress the value of savvy spendings. If you have them on your Republic Wireless plan (which we sure hope you do), then explain to them why a low-cost cell phone plans frees you financially in other areas of spending. You could even consider starting them on one of our lower cost $20 or  $25 plans, and allowing them to upgrade to a larger data plan if they are willing to pay the difference.

Budgeting for kids

Money lessons for children don’t have to be complex or boring. We hope the tips above are helpful and get your creative juices flowing on how you can start teaching your kids about the value of money that they will enjoy.

With any small or large steps you take towards educating your children on being responsible with their money, you will see them begin to understand and take money more seriously. Whether it’s a piggy bank or a bank account, any learning opportunity is a valuable one.
Do you have some great tactics regarding savings and spending that work for your family? Share them with us and fellow parents!

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Notable Replies

  1. amitl says:

    One of the things that I work hard to explain to my son is the difference between cost and value.

  2. @amitl Great one, thanks for sharing! How old is your son if you don’t mind sharing? And what type of examples do you use to teach him about cost vs value?

  3. amitl says:

    My son is 12, he has his own brokerage account. I talk to him about investing into the future and not worry about the day to day fluctuations in the stock market. He owns a couple of stocks, I don’t judge his stock decisions just point him to tools that provide publicly available information about the stocks.

    I feel too many kids gets suckered into school based savings accounts that earn little to no interest and these accounts generate next to nothing in terms of interest…they are much better off keeping that money in a piggy bank.

    As for cost vs value - my son will often wonder why I readily shell out 3+ bucks for a bottle of water when we are at
    an airport, etc…but give him a hard time for buying a bottle of soda that costs only $1.50… his comeback… is “I’ll pay for it…I got a lot more saved in my piggy bank”…and I try to explain (with varied levels of success) that the cost of that item is not as important as the value that it presents to you at any given time. It’s still a work in progress :slight_smile:

  4. swall says:

    I like the example you use for cost vs. value! That’s a great way to put those purchases into perspective depending on the specific situation, and being able to make spending decisions based on that. It sounds like you’re setting your son up very well for the future :slight_smile:

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