Budgeting for Kids

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Budgeting is an important skill for kids to learn. Here’s how to teach your children to manage their money and why you need to.

Why is Budgeting Important for Kids?

Most people will agree that budgeting is important; yet for many of us it’s something that we didn’t learn until adulthood – some might even argue that we haven’t mastered it yet.

Managing your money is a life skill and the sooner you learn it the better. I for one, absolutely wish that I had learned money lessons earlier in life, it would’ve saved many a financial mistake.

So instead of leaving the younger generations to figure it out for themselves like most of us, why not teach budgeting from a young age?

The advantages are great and though some may argue that children are too young to understand, I say you’re never too young to start trying.

The Advantages of Budgeting for Kids

The environment that a child grows up in will have a huge effect on the adult that they grow up to be.

Kids are much more observant than we give them credit for, and so how they see us interact with money will lay the foundations to their own relationship with money in later life.

That’s why the sooner you start openly talking about and teaching kids about money, the better off they will be.

Here are a few of the advantages of budgeting for kids.

Teaches Good Money Habits

If kids learn about money from a young age, then they’re less likely to make the financial mistakes that you and I probably did when we reached adulthood (credit cards and overdrafts were basically free money, right?!).

Understanding that money is earned, that you have to save for the things you want and giving where possible, are basic tools that will mould them into a financially independent adult.

Equips Them with Practical Knowledge for Adult Life

Budgeting can be made fun for whatever age your child is.

With encouragement and persistance, not only will your child’s mental maths ability improve but when they get out into the world on their own, they’ll understand how to manage their own budget and running a house with bills will be less of a shock to the system.

Teaches Responsibility

Budgeting is a great way of teaching your child responsibility.

The methods you use might be completely personal to your family.

But for example, you might allow your kids to earn pocket money for chores. This will teach them other domestic skills whilst also showing them that money is earned and that it doesn’t come from an infinite bank of Mum & Dad.

Inspires Money Confidence and Independence

Helping kids to manage their own money is a great way of increasing their confidence.

And money confidence is a great asset for adulthood.

A child who has been raised to openly talk and ask questions about money is more likely to be confident in negotiating their salary when it comes to future employment.

Studies show that they’ll also be more likely to save for the things they want earlier in life, less likely to get into debt and have the confidence to invest in their future.

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What Age Should You Start Budgeting?

It’s never too soon to start talking about money.

Even toddlers and preschoolers can understand the concept – playing ‘shop’ for example is a great way of introducing them to money.

Obviously, the older they are, the more they’ll be able to understand.

But laying the foundations as early as possible will mean that they will already have a grasp on the basics.

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How Do You Explain Budgeting to a Child?

How you explain budgeting to a child will depend on their age, but it helps to keep it as simple as possible.

Don’t over complicate things, a budget is in essence – money in vs money out.

You will know the teaching methods that suit your child best. Some are visual learners, so grab some paper and colourful pens.

Other learn by doing, so playing shop, counting physical or pretend money and using piggy banks are great tools for educational play.

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Budgeting for Kids – How to Teach Your Child to Budget Money

The 3 Jar Method

Kids don’t have bills, so their budget isn’t going to look like our budgets.

(Though there’s absolutely no harm in showing off your budget to your children and discussing it if they’re old enough to understand.)

A great way of teaching kids how to budget is using the 3 jar method.

Get 3 old coffee jars and add labels: Save, Spend, Give.

When they get their pocket money or birthday/Christmas money help them to divide it between the 3 jars.

A jar for saving for that more expensive toy they want.

One for spending now (when they want a treat or a magazine during the food shop).

And one for giving – they can drop coins into charity boxes when you’re out and about or save up and make a donation to a cause of their choice.

Give Them Pocket Money

Of course, in order to budget money, they have to have money to budget.

You might choose to give your kids a weekly/monthly allowance.

You might ask them to earn it by completing jobs around the house.

Whatever works for your family.

Use Visual Trackers

Help your kids see what they’re saving for with a chart tracking their saving progress.

They work wonders for some of us, even as adults, so imagine how exciting it could be for your kids seeing the chart fill up.

Get them to help you make it – grab a big sheet of paper, colouring pens, stickers – whatever, and make it fun.

Then put it up where they can see it.

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Budgeting Apps for Kids

If your kids are slightly older and have their own smartphone, there are a lots of kid friendly pocket money/budget apps you can try. Here are a few suggestions.


A prepaid card with lots of interesting features on the app. Try for 30 days for free, then £2.99 a month.

Rooster Money

Like goHenry, another prepaid card with lots of fun features on the app to teach kids about money. It costs £19.99 a year, with a month’s free trial too.


Another fun option, Osper is too a prepaid debit card. With an app for parents and another for children, you can load allowance onto their cards. On their app they can see their spending analysis and set up savings goals which are great features for teaching them about money. Try free for 30 days then £2.50 month thereafter.


HyperJar’s Kids Card is free and perfect for teaching young children about saving and money. Simply transfer money through your HyperJar account and they’ll have their own card for spending. There are no subscription fees or fees for transferring funds with this card.

Budgeting for Kids – A Summary

While talking money can for us, still be quite taboo sometimes, it’s really important to be open and raise discussions with the younger generations.

Giving them the headstart in money education that many of us didn’t have ourselves, will set them up to be confident and financially independent adults.

It’s never too late and it’s never too early to learn to manage your money.

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