Seven Ways to Teach Budgeting Skills Early

This article lists seven ways that you can teach basic money management to your kids.

By Heather Rech — March 6, 2023

Tags: budgeting, earning potential, financial education tools, money mindset, no spend weekend, parental guidance, podcast

Seven Ways to Teach Budgeting Skills Early

In my twenties I couldn't tell you where my money was going. I could tell you that I didn't have enough of it. It also felt like-because I didn't have very much-that there was little I could do. Since finances were already tight, any unexpected car repair or high medical bill felt like a final blow on an already sinking ship. Social situations like going out to eat with friends, taking trips, or receiving the ask to be a bridesmaid felt like a financial burden. Additionally, I was so stressed by my lack of control and scarcity mentality that I would oscillate between spending impulsively or spending nothing at all. In my mind, budgets were for people who had money. Since I didn't have much money, it seemed there was nothing I could do until my income changed.

Although increasing my income was part of many changes that I made in paying off debt and getting control of my finances, I've started to see the overarching theme among people like me who struggled with money is that they just don't know. They don't know how much they are spending on eating out or shopping, how much interest they are paying on their credit card or the percentage of their income they should spend on rent. It was when I started to learn and apply basic personal finance skills like budgeting, planning for variable and fixed expenses and creating an emergency fund that my financial situation started to change. Ultimately it wasn't just my low income that was keeping me in debt and living paycheck to paycheck, but a lack of basic money management skills. Below are seven ways that you can teach basic money management to your kids and teens and help them avoid the money mistakes I made in my twenties.

1. Consider your Money Mindset.

Consider your own knowledge and application of money management. Whether intentional or not, how you use money is communicated to your children. Teach both your money wins and losses because both have value to the next generation. For me, getting out of the mindset that I was helpless to change anything in my financial situation was crucial in making changes that led to creating a budget, an emergency fund, and ultimately paying off 95K in debt.

2. Use a Debit or Prepaid card.

Let your kids practice personal finance with a parent monitored debit or prepaid card. You can read reviews and explore eight different card options in Investopedia's most recent article,"Best Debit Cards for Teens". I was especially impressed with the prepaid card from "FamZoo" that links the whole family to a virtual online bank. "FamZoo's" online site was created by a parent looking for a better tool to teach his kids money management principles. The site features are tied to personal finance lessons like creating saving goals, budgeting to zero and the impact of interest on loans. The first two months are free so that you can truly see if this tool is the right fit for your family.

3. Utilize Financial Educational Tools.

Like I mentioned above, "FamZoo," the virtual family bank, incorporates financial lessons but the debit card "Greenlight" also offers financial educational tools on an online site and with an app that features games, quizzes and videos. "Greenlight" has also partnered with the popular quiz app "Kahoot" to create several different game show style quizzes that incorporate financial literacy lessons in a fun interactive way. Users can also select Greenlight quizzes especially for elementary, middle, or high school students. Try playing the quizzes as a family and consider a monetary incentive for the winner to up the stakes.

4. Listen to a Podcast.

Marketplace's podcast, "Million Bazillion" is especially helpful financial education tool for elementary students. The podcast answers money questions submitted from kids about everything from insurance to cryptocurrency. Turn this podcast on in the car on as you do errands or on the way to school for an easy way to start a conversation about personal finance.

5. Create Earning Potential.

Personal finance skills are hard to teach devoid of hands-on experience managing money. Chores or a part time job can help kids and teens earn money themselves and understand the value of money and monetary outcome of a strong work ethic. Check out this article by Greenlight that provides helpful tips for age appropriate jobs for kids and teens. Ways your kids and teens can earn money | Greenlight. Don't forget to check out the list of 25 Places That Hire 15 Year Old's that is linked here.

6. Try a No-Spend Weekend.

It's important that parents model fun and socializing without the high price tag. My friends know me as the one who knows how to find a good time for free. It's in part because I'm curious and keep myself aware of community events. From free days at the zoo to utilizing the many metropolitan parks, I make sure I'm aware of what is happening in my city. If you can't find much to do in your area, consider pursuing the many "no spend" lists on the internet. Each list is full of ideas of zero cost things to do regardless of where you live.

7. Practice Generosity.

When we make a habit of charitable giving then we can start to break the mindset that happiness emerges from acquiring more money and more stuff. This practice of giving back, with both time and/or money, is an important part of teaching the next generation to embody citizenship and contribute as members of society. Opportunities to contribute can range from joining in a community clean-up day to giving to a non-profit organization. Consider your kid or teens interests and help them find a way to give back in a way that is meaningful for them.

Although many elementary and high schools still don't incorporate financial literacy in the curriculum, parents can instill some financial principles early and allow children and teens to practice with the educational tools and ideas mentioned in this article.

Heather Rech

Heather Rech started her college journey at Biola University and graduated from Liberty University in 2013 with a multidisciplinary degree in Spanish & Religion.

View all posts by Heather Rech