Simple tips to teach your kids how to budget

“Listen, this’ll help you save money when you’re older.”

This is what I overhead in the supermarket: a mum explaining to her son how to read the unit price on labels to see if the offer was really a good deal or not.

And, (as mums so often are) she’s right. Teaching your kids about managing money is a great skill and one they’ll be thankful of when they’re older. With all the help you can get budgeting these days, it isn’t a difficult skill to pick up. However, forming positive habits takes time. The earlier you start, the better!

Jam jar budgeting

how to budget using a jam jar

We’ve spoken before about the jam jar method for budgeting and think this is a great method for kids because it’s so visual. You can also have fun painting your jars and labelling them up.

If you give your kids pocket money or they have money for birthdays, get them to set up a jam jar system to organise their cash.

A simple system would be a jar for small purchases like magazines, sweets, small toys or activities. Give them another, slightly bigger jar for treats they can’t afford straight away like video games or larger toys.

Let your kids divide their money. That way they’ll start to understand money is finite, instant reward vs. saving as the levels go up and down, and how to prioritise what they spend or save.

If you don’t give pocket money, consider saving up all your small change in a jam jar for your kids to see. When it’s full, you could share your spoils with them and help them chose something affordable. Or, get them to set a savings goal and take them to the bank to deposit the money and start saving again.

Why not track your kid’s saving efforts with a coloured chart? Ricky Willis (Skint Dad) has found this method to be really effective:

“Children, especially younger ones, understand things more visually. If our youngest wants to buy something, whether it’s sweets or a new toy, we have a chart and she colours it in every time she gets a bit of pocket money.

She then understands that she can’t get the treat until she saves enough and can see her savings grow.”

Be clear with your messages

You never know what your kids pick up on until they repeat a word they overheard you saying. Usually when you least want them to.

Always try to be clear about what you tell your kids about money. If they hear you can’t afford something but then go out and buy it any way you’ll be sending confusing messages to them. Penny Golightly explains more:

penny golightly

“If you have young children, you will be their biggest role model and this also shapes their attitudes to money.

Let them see you making shopping lists before going to the supermarket, shopping around for good deals, creating simple budgets, and paying bills on time. Involve them in discussions about saving up for emergencies or for a family holiday too.”

If your kids ask for something while you’re out shopping, try not to tell them you can’t afford whatever they ask for as a quick answer. Explain to them what you’re buying today and why so they start to understand that they don’t have to buy something for them every time they’re in a shop.

This principle doesn’t just apply to the big food shop, as Andy Webb (Be Clever with Your Cash) will attest:

“When I take my niece to the cinema, I let her choose her sweets – but she’s only got £1 to spend. So she gets a nice treat while learning a little about money and budgeting.”

Get them involved with your budget

Try taking kids with you on your weekly food shop, giving them the cash to spend and a list of what you need. Guide them on how to read the labels on the shelves, looking at the cost per unit rather than promotional offers.

If they want treats in the weekly shop, see if they can understand how make savings elsewhere (by looking for cheaper brands or going without something altogether). Let them give the money to the cashier to help reinforce that once it’s gone, it’s gone. Paying on a bank card doesn’t have the same effect.

Jasmine Birtles (MoneyMagpie) has a great tip to help involve and inspire your little ones:

“One great way to teach children about money is to make them part of your discussions about it. For example, if you’re saving towards a holiday, get the kids involved and see if you can all come up with ways to make extra cash together to reach your goal.

 Tell them how much it’ll cost and how much you have saved up so far. It will be fun for them to think of ways that you can each contribute to the holiday cost.”

Do the leg work

If you’re working with pocket money, once it’s saved up and your kid’s decided what they to spend it on, get them to do some research. Where’s the cheapest place for them to buy the product from? Is it cheaper online (especially once you take postage into account)? If they wait a little longer could they take advantage of a sale?

Researching a product not only fosters a healthy money-saving habit, but also teaches kids how to be patient and to ‘look deeper’. Flashy adverts and tempting offers are designed specifically to create pressure to BUY THE THING RIGHT NOW. Teach your kids to cut through the noise and make sound purchase decisions.

Do a quick search in YouTube to find honest reviews on toys by actual children. Kids are a lot more perceptive than adults give them credit for. Watch the videos together and ask them what they thought:

  • Did the boy/girl doing the review look like they were having fun?
  • Do you think the boy/girl was honest about their review? Why/why not?
  • Do you still want the toy?

This also goes back to the importance of involving kids in the buying process, and making their opinions feel valued, which is surely a good thing!

Jo from Slummy Single Mummy has found that being honest and open about money with her daughter has really paid off:

“She’s always been inquisitive, and so I’ve always answered her questions about money very openly and honestly. We talk about earnings, how much things cost, how many credit cards I have – everything really! Lots of parents think that by not talking to kids about family money issues that they are somehow protecting them. However, in my experience that talking about money makes children more financially aware.”

Money doesn’t grow on trees

If your kids are receiving an allowance, consider linking it to chores so they can start to see how money is a reward for work. Make a list of chores for the month and based on how much you can afford to give a pocket money put a price on keeping your room clean, mowing the lawn or cleaning the car.

Molly Benjamin from She’s On The Money is a great believer in teaching the kids to muck in:

“My parents always made us do chores for our pocket money. Therefore, we placed a higher value on our money than if we had just been given it each week. However, I’d get jealous of my friends whose parents would just hand them a tenner every time they asked for money, not realising that my parents were teaching me to have a work ethic!”

If you don’t give out pocket money, why not get your kids involved with selling their old toys and putting the money towards something new?


Above all, make it fun!

Whenever your kid takes a step towards money-savviness, be sure to reinforce their efforts with praise. Try saying things like:

  • You really helped mummy save money in the supermarket today!
  • I think it’s great that you’re working so hard to save up money.
  • Wow, you’ve grabbed yourself a bargain there. Well done!

It might feel a little bit hammy at first, but watch your kid’s face light up when you let them know how proud you are of them. You can’t put a price on that.

Have you got any tips on how you teach your kids to budget their money or save for toys? Let us know in the comments section.


Posted by in Budgeting