6 Tips On Teaching Your Kids to Budget

By: TXRB Staff | 17 Nov 2022

Kids Budget

As a parent, you want your child to be equipped for the real world and ready for independence. This means teaching them lots of important skills: how to change a tire, basic cooking and cleaning, taxes, how to create a resume, and many more. One of the most important skills that you can impart to your children is how to budget and handle money.

Why Teaching Your Kids About Money Matters

Many young adults struggle to successfully transition into independence precisely because of a lack of financial literacy. The financial knowledge and principles that children retain as they transition to adulthood originate primarily from their parents. (1) Intentionally teaching your children good financial skills like budgeting can aid their overall financial literacy and set them up for success.

How to Teach Kids to Budget

Start with the basics of money management: the budget. Below are our top 6 tips for teaching your kids to budget.

  1. Start early. One study found that money habits in kids are set by the time they are 7 years old. So, if you are wondering when to start, err on the earlier side of things. Some parents have had great success with kids as young as 3!
  2. Use cash. As kids get older it is wise to teach them all about credit and debit cards and how to use them. But, while you are still teaching them the basics, it’s best to stick to cash. Cash is much easier for kids to see and understand. When Junior wants to buy a candy bar, he should see the exchange (one candy bar = $1). By not receiving that dollar back, he better understands the cost of his purchase. Debit and credit cards can be swiped and handed right back to the child which does not really communicate what is happening in the transaction.
  3. Find a clear piggy bank or jar. There are three things that children should be encouraged to do with their money: give, spend, and save. When teaching kids to save find something clear to put their savings in. This way the child can see their contributions and how their money is growing.
  4. Encourage giving and contentment. Kids should see all the good things that money can do, that includes charitable giving! Give your kids lots of opportunities to be generous with their money and encourage them to be content with what they have when they do not have the funds for the toys that they want.
  5. Open a bank account for them and give them big goals. Giving your children a bank account and some big goals (I.E. save for college) is a great way to encourage them to think bigger than toys and candy.
  6. Scale up with your kids. As your kids get older they should be given more responsibility and greater expectations. Encourage teens to get a job or start a small business. Maybe even consider showing your older kids how you do your budget, giving them an even greater glimpse into how much things cost.


Budgeting is the first step to teaching your kids about money. But don’t stop there! As your kids age, they should be taught about how to avoid bank fraud, the magic of compounding interest, how to file taxes, and how to apply for a loan. All of these skills will help to shape your child into a financially successful and responsible adult.

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