Teaching Kids About Budgeting: Simple Steps for Lifelong Impact

#053 00:00 – Introduction to the Episode

• Eric sets the stage with relatable scenarios about children spending impulsively and questions how parents can prepare kids for a future where money plays a big role.
• Today's topic: Teaching kids about budgeting and its potential to transform their lives.

01:45 – Welcome to Raising Financial Freedom

• Introducer introduces the podcast and its purpose: guiding parents on how to teach their children financial literacy to achieve lifelong success.

03:00 – Why Budgeting is Critical

• Eric explains why budgeting is a top priority even ahead of saving and investing.
• Budgeting helps children allocate income, plan for the future, and build confidence.
• Imagining a financially empowered future for your child.

06:15 – Reflecting on Your Own Financial Education

•  Eric asks reflective questions about whether listeners were taught about money growing up.
• The importance of giving kids the tools to control money rather than being controlled by it.

08:30 – What is Budgeting and How to Teach It to Kids?

• Definition of budgeting: A simple plan for money allocation (save, spend, and goals).
• Practical tips for teaching budgeting to kids: 
  • For younger children: Use jars or envelopes labeled spend, save, share.
  • For older children: Tracking expenses and creating mini-budgets for personal goals.

11:20 – Budgeting in Action: A Real-Life Story

• A story of an 8-year-old saving for an electric scooter using the jar system.
• Lessons learned: Pride in saving, the value of patience, and achieving goals.

13:05 – Teaching the Difference Between Needs and Wants

• A fun game for kids at the grocery store: Identifying needs vs. wants.
• The lesson: Prioritizing needs can give freedom to enjoy wants later.

15:00 – Saving Goals and Visual Motivation

• The importance of savings tied to exciting goals.
• Using visual aids: charts or thermometers to track progress toward savings milestones.

16:50 – Making Budgeting Fun

• Family challenges: Setting savings goals for everyone and celebrating progress.
• Apps and games for kids to learn money skills in engaging ways.

18:30 – 5 Tips to Teach Kids Budgeting

• Pay for Mistakes System
  • Teach kids the consequences of overspending by making them earn back lost money with extra chores.
• Be the Family CEO for a Day
  • Let kids manage a small budget for the family, e.g., planning meals or activities.
• Earn Allowance Through Unique Chores
  • Assign special tasks beyond regular responsibilities and pay accordingly.
• Set Savings Goals with Visuals
  • Create goal charts they can fill in as they save toward something exciting.
• Involve Kids in Real-Life Budgeting
  • Include kids in family budgeting decisions like vacations or big purchases to teach them about financial planning.

23:15 – The Bigger Picture

•  Eric  highlights the long-term impact of teaching kids about budgeting: confidence, responsibility, and empowerment.
• Encouragement to start small and make lessons fun.

24:45 – Closing Remarks by  Eric 

• A call to action for parents: share the episode, subscribe to the podcast, and take small steps to teach financial literacy.

25:30 – Outro by Introducer

• Motivatio

Transcript

**Eric**:
Today we're diving deep into a topic that has the potential to transform your child's future. But let me start with this. Have you ever had one of those moments? You know when your child spends their entire allowance in two seconds flat on a bag of candy, chips, and a drink. Then five minutes later, they're begging for something else. Or maybe you've looked at how the world is changing, how money drives so much of what we do, and thought, How can I prepare my kids for this? If you've ever asked yourself this, you're not alone, and you're not powerless either. Today, we're going to talk about something so simple, but so impactful. Teaching kids about budgeting. Now, let's get it in.
**Introducer**:
Have you ever wondered why some people seem to have it all financially? Do well-off parents simply hand their children money, or is there more to this wealth thing? Welcome to Raising Financial Freedom, the podcast. We are here to talk about everything you never knew to teach your children when it comes to money.
**Eric**:
Now, for me, out of the big three, saving, budgeting, and investing, I rank budgeting ahead of the other two for the main reason that you need to budget money for savings and investing. Knowing where to allocate your income is very important, and if your child can use this aspect in their life, they will be one more step closer to financial freedom. But let me be clear, this isn't just about numbers in a notebook or jars of coins. Teaching your kids to budget is about preparing them for life. It's about giving them the confidence to dream big, plan for the future. And own their choices. And trust me, it's never too early or too late to start. I want to kick this off by painting a picture for you. Imagine your child 10, 20 years from now. They're adults stepping into the world on their own. Maybe they're buying their first home, starting a career, or even running their own business. Now ask yourself, what do you want them to feel when it comes to money? Do you want them to feel empowered and capable like they're in control of their financial future? Or do you want them to feel overwhelmed, stressed, and constantly playing catch up? Here's the good news. The foundation for how they'll feel about money is built right now. It starts with simple, everyday lessons like learning to save for something they want or choosing between needs and wants. These early experiences shape their habits, their confidence, and even the way they approach opportunities as adults. Let's take a moment to reflect.
**Eric**:
Did anyone ever teach you about money growing up? Maybe you learned from your parents or maybe, like so many of us, you had to figure it out the hard way. Imagine how different things could have been if someone taught you before you made mistakes. Imagine how freeing it would have felt to know that you could control money instead of letting it control you. That's exactly the gift you can give your kids. All right, let's get into the practical stuff. What exactly is budgeting? And how do we explain it to kids? Let's make it super simple. Budgeting is just a plan for your money. That's it. Nothing complicated. It's a plan that helps you decide what to save, what to spend, and how to work toward your goals. Here's where it gets fun. You can make this concept tangible for kids. For the younger children, try using jars or envelopes labeled spend, save, and share. Every time they get an allowance or birthday money, they can divide it into these categories. It's a visual, it's interactive, and it makes budgeting feel like a game. For older kids, you can introduce ideas like tracking expenses or even creating their own mini-budget for something they care about, like planning a trip to the movies with their friends. The key is to make it relevant to their world. Let me tell you a quick story. A friend of mine used this method with her eight-year-old daughter. Every week, they'd sit together with her allowance and put two dollars in the save jar, two dollars in the spend jar, and one dollar in the share jar. Her daughter was saving up for a new electric scooter and every week as she added to her jar she'd get more and more excited. By the time she had enough money to buy the scooter, she was so proud of herself. Now, her parents also helped her pay for it. But it wasn't just about the scooter, it was about the fact that she had made it happen. That's the power of budgeting. It teaches kids that they are in control of their future. It's a simple and easy way to make money. It's a simple and easy way to make A big part of budgeting, whether you're a kid or an adult, is learning the difference between needs and wants. Here's a fun way to teach this. Turn it into a game. The next time you're at the grocery store, ask your kids to help you figure out what's a need and what's a want. Is bread a need or a want? What about cookies? How about a new toy? This helps them think critically about spending decisions in a way that feels fun and interactive. But here's the kicker. It's not just about labeling things, it's about helping them understand that when you prioritize needs, you have more freedom to enjoy your wants. It's about teaching them that every decision has value, and that they have the power to make smart choices. Let's talk about saving. This is where the magic of budgeting really comes to life. Saving teaches kids patience, goal setting, and the beauty of delayed gratification. One of the best ways to save money is to save money. One of the best ways to inspire kids to save is to tie it to something they're excited about. Maybe it's a toy they've been wanting, or a family trip they want to help contribute to. Whatever it is, show them how saving a little bit at a time can get them there. Here's a pro tip. Make the savings journey visual. Use a chart or a thermometer they can color in as they get closer to their goal. Trust me. Seeing their progress builds excitement and keeps them motivated. Who says budgeting has to be boring? You can make it fun and memorable. Try turning budgeting into a family challenge. Everyone sets a savings goal for the month, mom, dad, and the kids included. And at the end of the month, you celebrate everyone's progress together. Maybe the winner gets to pick the family movie night or a special treat. There are also amazing apps and games designed for kids to learn about money in an engaging way. Apps that turn budgeting into a virtual world where kids can learn by doing. These are especially great for older kids who are already tech-savvy. Here are my five tips that can help get the message of budgeting across into their heads and stick. The first one, make a pay for mistakes. System how it works. If a child overspends or makes a poor financial decision, e.g. spending their allowance on something they run out of money for, they're not going to be able to save that money. They're going to regret it. They pay by doing extra chores or earning back some of the lost money. It's unique because it creates real-world consequences and shows them the value of thinking carefully before spending. My second one is, let kids be the family CEO for a day. How it works is that once a month, give your child a small budget of $20 or less and let them decide how to spend it for the family. Like picking a breakfast menu or breakfast. Or planning a movie night. I like this one because it gives them hands-on experience and teaches kids the responsibilities of managing money, collaborating, and making financial choices that benefit everyone. The third one is to give them an allowance. Provide a small allowance, but make them earn it by completing unique chores and not their regular chores. Example, chores like cleaning the garage or cleaning inside your car. It teaches the value of hard work and how to manage the money they earn. Just like in adulthood, it also provides them with cash in hand. The fourth tip, set savings goals with visuals. Create a goal chart for something they want like a bike, video game, or skates. Let them color in milestones as they save up their allowance. Here's my favorite tip. Involve your kids in real-life budgeting decisions. For example, if you're planning to buy a car, you can invest in a car. If you're planning a family vacation, sit down with your kids and talk about the budget. Explain how much money you have to spend and ask for their input. Should you spend more on activities or on food? Should you save for souvenirs? This not only teaches them how budgeting works in the real world, but also makes them feel included and valued in the process. Here's what I want you to take away from today. Teaching your kids about budgeting isn't just about money. It's about giving them the tools they need. It's about planting seeds of confidence, responsibility, and empowerment that will grow with them for years to come. You don't have to be a financial expert to start. Just start small, make it fun, and remember every small lesson adds up to a big impact. Thank you so much for joining me today on Raising Financial Freedom. If you loved this episode, share it with another parent or caregiver who might need a little inspiration. And don't forget to subscribe for more tips and stories to help your family thrive. Until next time, start early so that your children can thrive forever.
**Introducer**:
We really hope you enjoyed this episode of Raising Financial Freedom, the podcast. Stay connected with us directly through RaisingFinancialFreedom.com. You can also join the discussion on social media, which you can also find links on our website. If you would like to speak with us, please send us an email to RaisingFinancialFreedom.com. And as always, thank you for pushing your mindset towards a better reality. This concludes the most thought-provoking portion of your day. Don't forget to please like and subscribe to stay fully up to date. Until next time, be kind to yourself and each other.