How to Encourage Kids to Budget Their Money

Encouraging kids to budget their money introduces them to a life skill that can serve them well throughout their life. Here are a few ways you can help your kids get started.

budgeting for kids

“I forget what I’m saving my money for.” My youngest said to me as we walked around Target. “So can I buy something with my allowance?”

And therein was the problem.

It’s not that my daughter had seen something on a shelf and decided she wanted it.  With twenty dollars in her savings jar back home, she just wanted to buy SOMETHING and had forgotten why she’d put that twenty dollars aside.

She was slipping into the mindset many adults do: wanting instant gratification instead of saving towards a larger goal.

Speak to any financial planner and they’ll tell you learning how to budget money and live within a budget is an essential skill to a secure financial future. A budget provides a plan to ensure all of a family’s or individual’s needs are covered.

So helping young kids learn that budgeting their money can help them achieve their financial goals (however minor those goals are at a young age) is a valuable lesson that will help kids into adulthood.

The Trick to Getting Kids to Budget and Save Their Money

Something had to change. Clearly, my daughter didn’t understand the value of setting money aside for a larger goal.

Over a year ago I set up an allowance for both my girls – including jars that divided their money between spending money, savings, and money to donate. So far having their own money had taught them that items we buy in the store require money and that money is finite.

But the idea of setting money aside, or rather delaying gratification, was still not getting through to them. More was needed to help them understand how to budget their money.

What became clear during my conversation with my daughter in Target, is that she needed a way to keep her savings goal top-of-mind. As I thought through how best to accomplish this, the idea came to find a way for her to write it down.

Writing down her saings goal would make it difficult to forget. And help remind her that she had a goal in first place.

So I created a money binder for each of my girls with a sheet that allow them to keep track of their expenses and savings.

These sheets aren’t quite the same as a budget an adult would make – determining how much money is needed for food, housing, clothing, etc. – but my girls are young and these basic sheets are good practice before they have greater needs and wants.

Below is the savings sheet my girls now use to keep track of their goal, how much they have saved, and the impact interest payments have on their savings. (To read about how I teach my girls to save their money and why I pay them monthly interest, click here.)

Click on the images below to get your own copy of the My Savings and My Spending sheets. You’ll also be signed up for my weekly email where I share one tip each week about raising self-sufficient kids. 

Savings Sheet for Children

In addition to the savings sheet, I also created a spending sheet. My hope is that by having a written record of they have spent their money will teach my daughters how impulse buying makes it difficult to reach a savings goal.  This sheet also serves as a reminder of past purchases that weren’t as fulfilling as originally expected (a.k.a. buyer’s remorse).

Now every Sunday when my kids receive their allowance, they’re responsible for recording that money on either their spending sheet or savings sheet depending on in which jar they choose to put their money.

And when they make a purchase, they record it on their “My Spending” sheet.

Children's Spending Sheet

Trying to Raise Savers

That day in Target was eye-opening for me.

As my daughter contemplated spending her twenty dollars in savings, I began to wonder if I had done something wrong. Was providing my kids an allowance just making them flush with cash and not teaching them money management like I’d hoped?

Fortunately, I was eventually able to dissuade my daughter from buying whatever looked interesting in Target. We talked about how saving her money for something she really wanted would be more fulfilling, and she eventually agreed.

The next week I provided both girls with binders filled with the spending and savings sheets above. They both began writing down their savings goals and keeping track of what they’ve spent their money on.

And it’s paid off.

Over the past six months, there’s been a change.

Now when we go into a store my daughter doesn’t search the store for something to buy because she knows she has a larger goal she’s saving for.

The practice of managing her own money has also made her more aware of costs and the value of items for sale. For example, she now asks how much a dish at a restaurant costs and will look for something else if she feels it’s too expensive.

This is all to say that teaching kids how to manage their money isn’t easy and there will likely be more bumps along the way as we continue this journey. But knowing that my girls are beginning to get “it” – to understand the difference between needs and wants, that it’s worth it to delay gratification for a larger goal, and that money really doesn’t grow on trees – makes the process worth it.

The Kids Money Management Toolkit has everything you need (except money!) to begin giving your kids an allowance. In addition to guidance and advice, you’ll also receive Save, Spend, and Share jar labels, a Kids Money Ledger, a Savings Challenge Sheet, a Jobs-for-Hire Sheet, and a Kids Allowance Contract. Click here to learn more.

child looking over kids money management toolkit and spend save share jars

Related posts:

How to Teach Kids to Save Their Money

One Powerful Tool to Help Parents Manage Allowance

Teaching Kids Delayed Gratification in a “Buy Now, Pay Later” World

How to Make Money as a Kid

About the Author

Kerry Flatley is the owner and author of Self-Sufficient Kids. She has a BA in economics, an MBA, a certificate in financial planning, and has been investing ever since she landed her first job. Kerry also has two girls, ages 11 and 13, who have been receiving allowance – and learning money management – for the past five years.