Teaching your children how to manage their money may be one of the most important legacies that you can leave your child. Financial literacy is the key to building wealth. There are many activity-based budgeting tools available to parents and grandparents. Teaching your child about managing money does not require lesson plans.
You can make it fun for your kid while teaching them how to open a bank account, spend responsibly, and avoid credit card debt. This is a big one as debt robs you of future savings and investing opportunities. However, budget activities for teaching budgeting to kids can start with simple board games like the Game of Life. Learning money management can be enjoyable, with fun real-life scenarios using board games.
Kids can learn about the real world of money management before receiving their first pay stub. Many of these board games can help them start thinking about their future goals. Children can learn about the cost of living and some unnecessary costs while having fun with a budget activity. However, the budgeting process does not have to be overly complicated. Using fun budgeting activities they can understand that you have a set amount of money for eating nutritious food, monthly expenses, and fun activities like online games.
There are many budgeting methods to help them learn how to spend and save no matter how much money they earn. You do not have to wait for them to become high school students, you can start as early as grade school. There is nothing wrong with combining learning the ABCs, reading, writing, arithmetic, and a traditional budgeting method. Let’s delve into some budgeting activities for teaching budgeting to kids.
School Room Activities
Classroom activities for middle school to high schoolers can become invaluable. It is more than counting jelly beans when they go door-to-door selling cookies, candies, etc. to raise money for a school activity. School taxes do not always fund student activities, therefore the ability to learn how to raise money at an early age can be taken into adult life. However, many parents step in to do the work for their children robbing them of these life skills. I know it is easier to do the job for them but at what costs? You can protect your child and allow them to do this important independent work.
Door-to-door fundraising is a safe way to learn marketing skills, supply and demand, people skills, and financial transactions. The children have a product to sell in exchange for a donation. The next activity is to supply the product purchased to the consumer. If the child participated in this activity the previous year they can use that data to determine how much they can raise and set new goals for themselves. Going door-to-door with your child protects them and it is a great bonding exercise they will remember for the rest of their lives.
School book fairs can also teach them how to budget and manage their money. You can give them a set amount to spend and challenge them to get as many books as their funds allow. They will have to decide how much they want to spend on each book vs. how many they want to buy. Do they buy an expensive book they want or several books for less money? It will be fun to watch them learn the value of a dollar.
Entrepreneurial Youth Group
I belonged to Junior Achievement. It was a great introduction to the business world. It also helped to build team spirit and an early entrepreneurial spirit. I learned to make a product, create a production line, allocate associated costs, and do marketing. It was one of the greatest experiences of my life as it exposed me to the workings of a small business. It was also my first introduction to financial literacy. The lessons learned were invaluable to fostering fiscal responsibility regarding business activity and cost drivers.
I proceeded to create my widget for production. I then learned to draft and implement a top-down budgeting system to allocate funds for marketing, and sales orders. My mentor was with me every step of the way. There are many similar programs to Junior Achievement. If this one is not in your area or not a good fit for your young entrepreneurial child, please consider the following programs. Research each of them using the latest version of Google Chrome.
Youth Programs
Junior Achievement (JA) is a global nonprofit with programs for entrepreneurship, financial literacy, and work potential. The JA programs also include JA Be Entrepreneurial, which teaches students about business models and how to identify business opportunities. The JA program provides learning experiences for elementary, middle, and high Schools. They reach 4.4 million students annually helping them achieve economic success, plan for their future, and make smart academic and economic choices.
The Distributive Education Clubs of America (DECA) is an association of students and professionals that prepares leaders for business, finance, marketing, hospitality, and management. DECA hosts competitions that test high school and college students’ knowledge and ability to apply business principles. DECA provides 60+ competitive events for high schoolers and over 25 for college students.
The Network for Teaching Entrepreneurship (NFTE) is an organization that provides entrepreneurship education to youth in underserved communities. NFTE’s programs aim to equip students with skills, connections, and real-world experiences. NFTE’s comprehensive entrepreneurial education program has reached more than a million learners.
Lemonade Day is a program that teaches children the basics of entrepreneurship by having them open lemonade stands for one day. Before the big day, kids learn to draw up a business plan, set goals, and determine costs. The program has served over 1.5 million kids.
Acton Children’s Business Fairs is a one-day fair where kids can launch businesses and develop problem-solving and interpersonal skills. There are limited locations. Visit the website to find a fair near you.
The Young Biblical EntrepreneurTM (YBE) program is a Christian entrepreneurship program. It prepares students ages 11–18 for real-world business challenges. YBE teaches the value of teamwork and biblical ethics. These young entrepreneurs will learn to take an idea from concept to development.
Board Games and Other Activities
The game board is an excellent place to start to teach how to manage money. Board games can help teach decision-making skills. For example, Monopoly will teach you how and why to buy certain properties. Monopoly can teach a wealth of money lessons with play money. Therefore, it is a great beginner lesson for property management.
The Game of Life mentioned above takes the player through multiple life events, such as marriage, having children, etc. The purpose of the game is to teach decision-making from youth to retirement. The player with the most money at the end of the game wins. The board game Payday teaches financial planning. The player who obtains the most money at the end of the game by making wise financial decisions wins.
All of the above games help your children learn but it is still up to the parents or guardian to teach the child how to apply these lessons in real life. Having additional conversations to build budgeting skills is the first step in teaching these important life skills. These games can all be purchased at your local toy store or online. The cost for each of the games is under $20.00. Here are some additional games: The Allowance, Cashflow For Kids, Charge Large, and Acquire.
In addition to board games there are books and using your imagination to create what-if games with your child. You can incorporate toys with a savings component like a piggy bank or savings jar. A fun exercise is to give children money with an option to save, give, or spend. This exercise is a good way to encourage the lessons learned from board games and other activities.
Traditional Methods For Budgeting
The traditional method of teaching children how to budget can be as simple as using a pencil and paper to create a budget worksheet. You can also download my budget worksheet to get started. The worksheet will allow you to demonstrate the basics of a budget by listing income and expenses. You can discuss how your family maintains its budget with actual or pretend numbers.
It will depend on how much of your finances you are willing to share based on the age and intellect of your child. Hence, you can start by identifying the available types of paper money vs. coins for younger children. For example, two nickels make a dime and four quarters make a dollar. At this point, you can introduce the banking toys that allow them to use piggy banks and registers to play with the money. Freedom Sprout suggested these ten toys to help teach your child about money. Here are the first five: Learning Piggy Bank, Money Set For Kids, Pretend & Play Checkbook, Toy Cash Register, and Play Wallet. Click the link for the full listing.
Next, you can introduce checking and savings accounts to the older children in the family. You can teach them how to use a checking account to pay bills and a savings account to save for needed things. Parents can start the child earning money doing chores. You can suggest they save or spend some of their allowance. Parents can guide their children in this process by opening their first savings accounts. Most banks offer no-fee student accounts.
Banking Apps
As your child gets older, there are various budgeting apps, especially if they plan to get a part-time or Summer job. A reliable budgeting tool will be needed once they start making real money. Many free online apps will help them get started. I found four free apps for you to research and try out EveryDollar.com (Free), YNAB (Fee), Pocket Guard (Free), or Good Budget (Free).
If you do not currently use these apps, have fun exploring them with your child. Each of these programs helps you to create and adjust budgets. Some apps allow you to link to your bank accounts to update your budget. Each app will help you establish a zero-based budgeting where every dollar you earn has a job. The jobs are paying expenses, savings, giving, and leisure based on the categories you set up in your budget.
Financial Decisions
Based on what they learn they have a better start on handling their finances starting with a little money until they begin to make the big bucks. However, having a good financial background should help them avoid future financial pitfalls. The decisions made regarding loans, credit cards, car notes, and mortgages are important. They can have a lasting effect on their financial independence for years. Therefore, they must understand these financial products, including interest rates, terms, fees, and payoff schedules. Even if they can afford the minimum payment it is not the same as being able to afford the item.
A budget goes a long way to planning what is affordable now and in the near and far future. This is a difficult mindset to adopt when the culture we live in constantly bombards us with ads that state we deserve to have it all and now. It is a buy now pay later society. However, paying later can be very painful. That is why having savings for an emergency or an expensive item is very important.
Investing and Retirement
If your children are fortunate to have living grandparents, this is a good opportunity to incorporate investing for retirement into your personal finance unit. There is a reason why Nana and Papa may have time to spend with their grandchild. On the flip side, Nana and Papa may have to come live with Mommy and Daddy because of their financial situation. Even though it may be wonderful to have them around they may have wanted to live independently. Teaching that planning and investing for their future will afford them options of living with or near their grandchildren.
Retirement savings give everyone a certain quality of life in retirement but mostly provide independence. Teaching them to begin saving into a retirement plan once they work full-time will afford them this flexibility. Start saving a small percentage of your paycheck or matching percentage from your company contribution as this is the low-hanging fruit.
It is never too late to begin saving for anything. However, the earlier you start saving for retirement the easier your retirement will be. The key is to set up automatic savings so you don’t miss the money. Set it and forget it and in 40+ years you can retire well. Here is a retirement calculator from Prudential that you can have fun sharing with your child.
Recap of Budget Activities For Teaching Budgeting To Kids
There are many financial resources to help you teach your children about personal finances. I hope that while you are teaching you will learn something too. You are never too old or too young to obtain financial freedom. A budget and dedication are all you will need. Teaching your child should be fun while teaching an important topic.
There are many board games, toys, and books to get you started. Hence, using games and toys in this learning process will foster family time. If possible have them participate in any school fundraising event to learn the power of money as they age and join financial groups geared toward children. You will never know if you have a child with an entrepreneurial spirit. You will want to encourage him or her to reach their full potential. Finally, teach your children to create a simple budget using their current allowance or part-time job. Here are some steps to take to get you started.
Budgeting Activities For Teaching Budgeting To Kids
1. Buy games, toys, and books about money.
2. Join any school or youth financial programs.
3. Make it part of your family time.
4. Build on by using real-life scenarios.
5. Start with a paper budget.
6. Later download apps for older kids.
5. Encourage your child to use one of these tools.
6. Use allowances and part-time jobs to create a budget.
7. Teach them about the available banking products.
The rich rules over the poor, and the borrower is the slave of the lender. Proverbs 22:7 (ESV)
This content is for information purposes only. It does not constitute financial advice. If you need personal finance advice, please consult a financial advisor. I do not endorse any of the companies mentioned. Please research and do your due diligence. I do not get paid if you click any of the links.
Additional Reading…
What Is The Purpose Of A Budget?