Teaching kids how to create a budget prepares them for a successful financial future. Begin teaching the value of money at an early age. Doing so will allow them to make smart decisions about spending and saving.
Keep reading to discover helpful budgeting skills for kids. We’ll share lesson ideas on how to make it a fun and educational experience.
Why should kids learn how to budget?
Teaching children how to budget can help nurture a healthy relationship with money. It will prepare them to make sound financial decisions as they grow into adulthood.
By learning how to budget, kids gain life-long skills, positive habits, and developmental benefits, such as the following…
- Learn money management skills and the value of money.
- Develop good habits, including budgeting for necessary items and avoiding impulse purchases.
- Learn to plan for the long term and set realistic financial goals.
- Build self-confidence as they become more independent in managing their finances.
- Establish knowledge for a lifetime of financial success.
What’s a good age for kids to learn about budgeting?
Children age five or six are capable of saving and can developmentally move past the piggy bank. By the time kids enter school, they should be able to grasp basic financial concepts. A child is ready to learn about budgeting when they have a general understanding of how money works.
How to Teach Budgeting for Kids

There are various fun and educational ways to teach kids how to budget properly. These include activities, games, conversations, and hands-on experiences. Use the following steps to help kids learn the basics of budgeting.
Introduce the Concept of Budgeting
Begin the discussion about budgeting by reviewing a lesson on financial literacy. As well as, the concept of working for money, and the value of money. Then explain that budgeting helps manage the money you earn.
Also, describe how a budget involves setting up a plan for how you will use your money. Walk children through how to create a monthly budget. Doing so ensures enough money to pay for the things you need and want.
Use real-life situations as examples of why they want to create a budget. Have students consider a potential situation. Such as, planning a vacation or shopping to buy an expensive item. Brainstorm what actions family members would need to save to have enough money to make such a purchase.
Explain Income and Expenses

Before kids can create a budget, they need to understand the relationship between income and expenses.
First, have students list sources of income, such as money from a job, allowance, or relatives. Then, have them make a second list of their expenses. Include the cost of groceries, rent, utilities, and any other bills or payments you make.
Once you have both lists, instruct your students to subtract their expenses from their income. A lesson on adding and subtracting with money can help students with this concept.
After subtracting, explain that the amount they have left is how much they have to save or spend. Point out that if their expenses exceed their income, they won’t have money for the things they need and want.
Sort Between “Needs” and “Wants”
Teaching kids the concept of needs and wants with budgeting can be challenging. However, it’s an important lesson when establishing a budget.
Ask your students to generate a list of everyday items in their life. Then have them sort each one into a need or a want.
Explain to them that needs such as food, shelter, clothing, and education are essential. Wants are things that you would like to have but are not vital for survival. Examples of wants include toys, video games, clothes, or electronics.
When kids understand the difference between needs and wants, they can prioritize their budgets. Have them address their needs first and their wants second.
Set a Budget Goal
Have your child or student create a budget goal for a specific purchase. For example, a toy, or a more expensive item, such as a new bike or video game. Make sure their budget goal is realistic and achievable.
Explain that by delaying short term spending, they can save money for something bigger and better in the future.
Create a Budget Plan

Encourage your students to plan a budget by deciding how much they will spend or save each month. Organize this information into three columns labeled as costs, savings, and goals.
Ask how much money will go towards their needs instead of their wants. Explain to them that needs should always come first. Include this amount in the costs category.
Use colorful and personalized visuals to make budgeting more exciting and fun for kids.
Teach the Importance of Saving
Saving money is a key component of financial literacy. It is also an excellent way for kids to learn about budgeting, understand the value of money, and manage their finances better.
Within their budget plan, instruct kids to plan for a portion of their monthly income to be set aside for saving toward their goal. Explain how establishing the habit of saving can help them reach their financial goals.
Learn the 50/30/20 Rule

This percentage-based budget plan prioritizes spending based on three categories. When students or children receive an income, they divide it by placing 50% of it into the needs, 30% into the wants column, and 20% into their savings.
For a practice run, set up three containers or jars and provide students with a hundred pennies. Instruct them to place fifty pennies into the needs jar, thirty into the wants jar, and twenty into the jar for savings. Repeat this process with their actual earnings.
Put the Budget into Action
Once your children or students have settled on a budget plan, put it to work. Kids can practice budgeting with a certain amount of money from home or using a pretend income as a school project.
Instruct them to track their spending and saving. By having to make real-life decisions, kids will get into the habit of budgeting.
Teach Budgeting with FREE Lesson Plans

Fun and educational lessons on developing and maintaining a budget offer multiple benefits for kids. At Learn Bright, we aim to make high-quality educational materials. From budgeting to financial literacy, and debit vs. credit card…we’ve got you covered! Check out our free lesson plans and video today!