Budgeting is a huge topic these days because it’s so important to everyone—no matter their age. The sooner you teach your children how to budget, the easier it will be for them when they start earning the big bucks. But for now, monopoly money, allowance, or candy might just be the tools your child needs to get them used to thinking critically while managing money.
Here are just a few of the methods you can use to help your kid practice money management.
This method utilizes three jars labeled savings, spending, and giving. Each week, your kids put money into each of the jars. Remember, this money can be anything from an allowance that they earn to a set rate of fake money or candy that they get every week. From there, they draw from each jar to do things throughout the week. That means buying things from a store or “buying” extra time on the TV. For the giving jar, you may help them find a charity they particularly like or encourage them to use the contents to give things to their siblings. Have some fun with it and make it a competition to see who has the most in savings by the end of the month/year. This technique is a great way to teach kids—at any age—how to budget properly and yes, that includes your toddler.
If your kids are ready to get a bit more into the details, you can try introducing them to envelope budgeting. Sit down with your teen and have them choose their categories—groceries, hair care/makeup, car maintenance, entertainment, gifts, school supplies, etc.—and watch as they decorate or create their own envelope budgeting binder. As they earn money, your teen can practice planning ahead and putting money into the correct savings category. For example, say they need new school supplies…They can label an envelope “School Supplies” and start putting a set amount of money in that envelope every week until they have enough to get what they need.
50/30/20 Rules for Kids
The 50/30/20 Rule helps kids understand a proven method of budgeting their money. The 50/30/20 Rule states that the best way to split up money is to put 50% of any allowance—or income—towards “needs,” 30% towards “wants,” and 20% towards “savings.”
The importance of budgeting can never be overstated, and it is a crucial life skill that everyone should learn, especially our young ones. Reflect back on your life and consider how learning to manage finances earlier could have made a significant difference in the financial situation you face today. It’s up to you to teach your children how to budget and it’s easy to do so using methods like the 3 Jar Allowance, Envelope Budgeting, or the 50/30/20 Rule. In no time, your kids will develop a sense of self-discipline, a goal-oriented mindset, and a knack for planning. By instilling these habits and values in your children, you’re shaping a better future for them and the world that welcomes them.
