Four Ways to Teach Children about Budgeting

teach children about budgeting

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teach children budgeting

When I was a child, at the beginning of each month, my brother and I would sit at a table, watching my parents put their salaries together and then inserted certain portion of the money into envelopes labeled as “groceries,” “school,” “utilities,” and so on. They also talked to us about how much we had saved in the past month and how we could work on a plan to buy things like a bigger TV. 

My habit of keeping a budget must have been learned from those days. It is sad that not many parents are talking to their kids about money basics now. In fact, involving kids early in your family budgeting and finance can benefit them down the road. Here are four ways I have used to teach my children about money and budgeting.

1. Teaching them how to use allowance wisely

Children earn allowance for doing house chores, but often parents do not care how kids spend their allowance. Even though that’s only a small amount of money, it can be seen as earnings, just as what we earn in the real world. We can help them be money-conscious and make good use of their money. Every time, when we give money to Andrew and Allison, we ask them to contribute at least 1/3 of it to the savings. They can use the rest of it for something they like. We have not yet collected “tax” from them like the real world, but we probably will as they are getting older.

2. Involving children in tracking monthly spending

I am a big fan of Excel and use it to document family spending. When Andrew was in the third grade, he participated in a technology club in school where he was taught some basics of Excel. I asked whether he would like to do the family spending-tracking using Excel for me and he accepted happily.

Using my template, he quickly learned how to enter numbers under each category. He even had more fun in it by adding his columns such as whether something we spent on was a need or a want and who initiated the spending –something like a mom for groceries and him for Baskin-Robbins Ice Cream. I also took this opportunity to teach him a little bit more advanced Excel skills such as Inserting pivot table, which allows a clear summary of costs by category with a few clicks.

By the end of the month, Andrew’s spreadsheet allows him to inform us about what we have spent most, and how well we are doing as compared to previous months. As his Excel skills are developing, he now even shows us charts and graphs and shares with us his thoughts on the findings.

3. Letting children help with DIY home improvement projects

DIY home improvement projects not only save money but also help increase the house value in the long run. Letting children help with DIYs is important for them to have a sense of ownership in the home and understand the value of hard work.

Our house is quite old and therefore requires a lot of improvement. If we ask a professional person to work for all of those, it will cost a ton. My husband and I identified what have to be done by professionals (e.g., electrical installation, major plumbing repairs) and what could be DIY projects.

So far, Andrew has helped his dad with several projects, including replacing leaking faucets, fixing door air leaks, unclogging an external drain, etc. He also accompanied his dad to shop for materials and rent tools. While he is helping us cutting spending, he is developing into a little handyman.

4. Giving children a budget and letting them make purchases or plan activities

Can children make things work with a limited budget? If you give them chances to try, they often can. Even if they fail, they probably will learn a lesson.

Last Christmas, we gave Andrew and Allison $20, respectively, as their budget for preparing Christmas gifts for all family members. I could tell how much brainwork they did to learn about each person’s wish, check prices (and taxes), and do the math to get the total cost. They both did a great job under the given budget. I got my favorite lip balm from Allison and a wonderful juicing book from Andrew (he even got a discount for it because he used a coupon!)

Related articles on teaching kids about money:

I hope you find these ideas helpful. A few final words– when we try to put discipline to our children, we need to put equal emphasis on ourselves. Children see, children do. A positive parental role model may be an even better method for improving a child’s money habits than attempts at behavioral control.

Teach children about budgeting

teach children budgeting


  1. very important to teach children the value and how to earn both money and respect before they grow up
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    1. Agreed. Thanks for stopping by my blog.

  2. Very important to teach kids. I will be implementing these when my son gets a little older.

  3. Teaching children budgeting is so important! My husband used to work for Dave Ramsey, and we learned a ton about helping kids budget there. Great post!

  4. Love this! I’ll make sure to teach my kids about this when they’re older!

    Belle | One Awesome Momma

  5. This is very good. My boys are just getting to where they are thinking about money, so I like the ideas.

  6. YES! I am so on board with this! I want my kids to earn money and learn the concept too! These are great tips!

  7. Great tips! Storing this for when my kiddos are a little older 🙂

  8. These are some great ideas! I never thought of having the kids help with DIY stuff, but that’s a great idea, both so they can learn how to save and also how much it all costs!

  9. great ideas for budgeting and teaching little ones about money

  10. I really like the idea of getting them to track their money. It’s easy to lose track and suddenly have no money. This year I’ve decided to give them a $10 budget for the gifts they need to buy for Christmas. I’m looking forward to seeing what they come up with!

  11. These are great tips, I will definitely remember these for when my children get of age.

  12. Such great ideas! We are starting to work on this with our oldest son. I love the idea of giving him a budget to buy some Christmas gifts this year. Maybe it will help him realize the value of money a little more.

    1. Yes! give it a try!

  13. This is SOOO important, and so so helpful! Learning about money is tough, especially when you don’t do it until you’re an adult! I really want my son to get started in life on the right foot, and I think that teaching them responsibilities like this is nothing but beneficial! Can’t wait til my son gets a little older and we can start working with money! Thanks for sharing <3

    1. Thanks so much for the comment. I am glad you find the information helpful. Best wishes to you and your family!

  14. This is just great to read! Thank you for your passion about helping kids with financial skills. When I was younger, I didn’t have anyone to teach me financial stuff. The book that helped me was, Rich Dad Poor Dad. This is also a good site:

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