Teaching Kids About MoneyA is for Apple….B is for Budget

Teaching Kids About MoneyA is for Apple….B is for Budget April 26, 2012

Do you ever wish that your child would have learned the alphabet like the title of this article?

As a teacher for nine years, I can tell you that I have had very few money talks with my kids while at school. I talk more about money now than I ever have before and I’m a music teacher!

But if there’s ever a chance where I can throw in the word “budget” or discuss my opinions of credit cards then I grab that opportunity by the horns. I don’t want my school kids to hate the word “budget”. Have you ever heard anyone say that word in a dreadful tone? I have and I don’t understand why.

The word “budget” and our family’s efforts to stick to the budget is what saved us from financial ruin while my husband was without a job for 8 months. I don’t want for my kids to fear the word “budget” or to talk about it like it’s left a bad taste in their mouth. So, I’m going to give you some tips on teaching your kids about money without letting them know that you’re teaching them about money. (This is where the teacher meets the parent – making a lesson so much fun that the kids don’t even realize they’re learning.)

Money Lessons For Children

Lesson 1: Teach Kids How to Spend, Save, and Give

One thing that I have learned from the teachings of Dave Ramsey is to teach your kids about saving, spending, and giving. We have (3) jars for each of our children with each one of these words written on the label. When they work, they get paid. No work results in no pay. Doing half the work, results in half the payment. I do have a reward system at my house where my children can earn stickers on a chart for behavior, but this is not the same thing. This is a completely different entity. (I just wanted to clarify that point for any misunderstanding.) The great thing about this technique is that my husband and I follow the same principle (except that we don’t need jars). On our budget, you see the words “Give”, “Emergency Fund”, and “Blow”. Can you see how we’re already teaching them to budget without breaking out the budget?

Lesson 2: Teach Kids About Responsibilities

How do I know when to “pay” my child? Good question! I have a suggestion, but I want you to feel free and adjust this to how it fits your children and your family. This is what my husband and I have decided together, as a team. We have told our kids that when they do things like feeding the dog, cleaning their room, or killing the fish by over-feeding them (which actually has happened multiple times in our house) then that does not deserve payment. There are some things that are done in our house just because you are a part of our family and I am asking you to help our family unit. For example, tonight my husband made our children scrape off their plates and then put them in the sink. They might earn a sticker on their behavior chart for doing this, but they will not be paid for helping Mommy.

Lesson 3: Teach Kids How to Budget

So how much do you put in the Spend, Save, and Give jars? I think this all depends on what you can afford. I have put as little as pennies in there and as much as dollars. Last Saturday my 6-year-old spent most of Saturday morning mowing the lawn with my husband so I paid him $3.00. I put $1.00 in Give, $1.00 in Spend, and $1.00 in Save. If you want to make it more memorable, then allow your child to put the money in the jar for himself.

There are times that I ask the kids to vacuum and I wind up doing most of the work. So, I would only pay them .50 for that job. I still congratulate them and I don’t mind taking over the job. To me, that’s still a valuable lesson being taught. I always say “It’s okay if you want to stop now, but if I have to finish the task then I get paid the rest of your money” – which it’s my money anyways – but you get the gist.

Lesson 4: Teach Kids How to Spend Wisely

What do you do with the money? In the past, when my oldest would get paid $1.00 he would beg us for days to go to Dollar Tree and use his SPEND money. We would usually comply since he worked so hard earning his money. Now that he’s getting older, he will ask us once to go to the store and then forget. So, I try not to bring it up. He is starting to realize that if he holds on to that money then he can buy things that are worth more than $1.00.

This is something that he has started on his own, we have not reinforced that thinking. I’m sure that every child will be different. We dig out of his GIVE jar whenever he needs money for church. If you don’t go to church, then please teach your kids to give elsewhere. With his SAVE jar we sometimes allow him to use that money to make a big purchase or we put it in his savings account.

Lesson 5: Teach Kids How to Say “NO”

“It’s Not in the Budget!” If none of the techniques listed above work, then recite this with your children every night! I’m just kidding. I do have a funny story to share about my two boys. My husband was in a daring mood and decided to take our 3-year-old and 6-year-old to the grocery store. Picture, if you will, a toddler sitting in the grocery cart and a 6-year-old (going on 30) walking alongside. The toddler reaches out for a bag of chips only to have the 6-year-old grab the bag of chips, place them back on the shelf, and yell out “Drew, it’s not in the budget!”. That is how I know I have taught my children about money.

Do you have any advice for parents who want to get better at teaching their kids about money? Share your thoughts or story in the comments!

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  • My son is 2 and my daughter is 1. Their grandfather is always talking about money and as I learn how to be the best dad I can be I incorporate that into the equation. You are right. Budget is not a bad word. Diet gets that same bad rep sometimes too.

  • One of the best habits I ever learned was saving. I required my children to save 50% of their money (allowance or presents). It gave them a discipline tha they still use today as adults.

  • Timely post, as I just wrote an article on my blog about teaching my kids to tithe. We pay our kids bi-monthly for the work they do around our house. They are paid $1.00 for each year of life, so our 5-yr old gets $5.00 and our 15-yr old gets $15, every other week.

    On each payday we ask them to divide their money into different envelopes: saving, giving (tithing), spending, and gifts (birthday or Christmas gifts for parents, siblings, and friends).

    We’ve been amazed at how quickly they learn to make decisions on how to spend their money because it is their money and once it’s gone, it’s gone.

    We’ve also been blessed to see how generous they are in giving back to the Lord through their tithe.

    Once each child begins to work around the house (about age 3), they get their own set of tithing envelopes from our church.

  • Great suggestions! In addition to telling my kids that something isn’t in the budget, I often will say, “We could buy that, but we are choosing to spend our money on other things.” I think it illustrates that we are making a conscience decision about what are money is used for instead of just reacting to life’s circumstances.

  • PK

    I thought you were going to go letter by letter – what would the entry be for ‘X’?

    Good list, even though as of today my kid count is 0. I’ll increase that at some point.

  • Guillermo Vargas Pizarro

    This article is really interesting and this point is valid, sometimes I try to teach my son about topics like how to spend and save money, we talk about payments, credit cards and all related with finances, my purpose is prepare my son for the future, I am sure that he is going to choose the best decisions.

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  • A parent definitely needs to look for opportunities – and then take advantage of them. That’s not always easy with our busy lives. Kidbudget has created a system for teaching money skills and creating opportunities for the parent and child to discuss all of these areas. Perhaps one of the most important things, is that parents first have to get their own finances in order. I think, parents who know how to handle money efficiently, will teach their kids the right things automatically.