top of page
  • Art George

Teaching Kids about Money: Necessity of Budgeting

What is your reaction when you hear the word “budget”? Most people have a negative reaction when they hear that word, but in order to get a good handle on how you are spending money a budget is necessary.

John Maxwell:

"A budget is telling your money where to go instead of wondering where it went."

Chris Hogan:

“It is important that, no matter what phase of life you are in, you will never outgrow the need for a budget. Budgetingis and always will be your road map to success, no matter how much or how little money you have.”

Rachel Cruze:

“As we get into get into the budget discussion with kids, I need to set up one ground rule for you, the parent: You have to do a household budget every month. You can’t teach your children to do something you aren’t willing to do yourself.”

Dave Ramsey:

“A budget does not limit your freedom, it gives you freedom.”

Proverbs 21:5 - “The plans of the diligent lead to profit as surely as haste leads to poverty”

As parents, teaching our kids about the necessity of budgeting is important. None of us have an endless supply of money to buy everything we want or think that we need. We have to remember that even if we are not having budgeting discussions as a family once a week that our kids can learn an awful lot just by watching how we, their parents, live. Parents can be good role models for their children. If parents are spending carefully according to their needs and the bills are paid, the unspoken lesson is positive. If the utilities are occasionally shut off and parents are having frequent arguments over finances, the unspoken lesson is obviously negative. Explaining something as simple as why we turn off the lights when we leave a room or why we turn down the heat when we leave the house will help to explain the basic principles of budgeting. As a child, I remember listening to my mom and dad discussing how much money there was for my mom to spend at the grocery store. I could tell, at times, that money was tight. My mom would go to several different grocery stores with the newspaper flyer in hand to take advantage of the weekly sale promotions at each location. She also always had a handful of coupons to save even more. Proverbs 22:6 - “Train up a child in the way he should go, and when he is old he will not depart from it.”

If your kids are still young, you have time to try to be a bit more intentional about teaching them. Dave Ramsey/Rachel Cruze talk about the “Envelope Systems for Kids.” Kids under age fourteen do not need to do a written budget. At this age, their envelope system is their budget. By teaching your children to work and divide their money between the Spend, Save and Give envelopes, you are already teaching them the frameworks of budgeting.

There are some creative ways to get your kids involved in the activity of budgeting. One example that has stuck with me from Dave Ramsey in his book “Smart Money Smart Kids” is when he was sitting at the kitchen table writing checks for that month’s bills. His older daughter (around 10 years old) came up and asked him what he was doing. Dave’s reply, “I hate to admit it but I was in accounting mode so I did not see it as a sweet moment. I just saw a kid with great potential to bother me. But it finally occurred to me that this was a teachable moment. I suddenly had the bright idea to teach her how to fill out a check. She climbed up in a chair beside me and propped herself up on her knees, began writing checks as I instructed her. Then the unexpected happened. She filled out the check for the electric bill and wrote in $238 and stopped. She looked at me as if a light bulb had come on over her head, astonished that electricity could cost so much. Then I let her know that amount was for only one month. So, that is why Mom is always on us to close the door when we go outside to play, she said. Not only did my daughter learn how to fill out checks but she also surprised me by recognizing value.”

I was talking to my adult daughter the other day and telling her that I was writing this blog about budgeting for our website. I told her I was having a hard time writing it since I felt that I did not have many practical examples from when she and her brother were younger. She said, “Dad, in 9th grade I already knew the advantages of a 15-year mortgage over a 30-year mortgage so don’t beat yourself up too bad!” Our kids are paying attention!

Whatever system you decide to use with your kids, the most important point is to teach them that money is not available in an unlimited supply and should not be borrowed as a way to buy what we cannot immediately afford. Budgeting allows us to manage the money we have while teaching valuable lessons about discipline and patience.

17 views1 comment

Recent Posts

See All

1 Comment

Dec 05, 2020

Smart- Thoughtful and practical ideas to get started with your family savings plan.

bottom of page