How to teach your kids about: Budgeting

A survey from MyTutor found that the number one life skill people wish they had learnt when they were a kid was ‘how to budget money’. With that in mind, I thought I would cover budgeting in this blog aimed at helping the next generation learn this essential life skill. I share a conversation I had from when I was invited to speak to a class of 7-9 year olds on ‘Budgeting’. I also provide some tips to help kids learn about budgeting.

Budgeting as a Superpower! I started off my conversation with the class by telling them they needed to pretend that they were all superheroes who needed to protect their city from any potential disasters that may come its way.  The superpower they had been given was Clairvoyance, the ability to see into the future. With this superpower, I asked them how they could make sure their city stayed safe. They came back with a series of clever and creative answers, including:

  • Building a wall around the city if they saw a big storm or flood coming;

  • Setting traps for any evil villains they knew were going to attack;

  • If they could see a UFO approaching to fly over the city they would tell everyone to stand completely still at that exact time so the aliens would think the city was a model with human statues [I told you some answers were creative!].

The reason I spoke to them about the Clairvoyance superpower was to help them understand that by looking into the future, they could take appropriate action to ensure a safe future for their city. I got them to do this exercise as this is exactly what budgeting involves.

Budgeting is the ability to look at what money could be coming in and what money is going out in the future. If it looks like there will be trouble (too much money going out compared to coming in), then you can take action to make sure your financial future is safe.

Get kids to look into the future I then encouraged the class to practice looking into the future with a simple case study where they all owned a little café together which just sold fish. They needed to work out how much to sell their fish dish to customers for. This example helped them to see that in order to price the fish, they needed to look into the future. If they priced the fish too low then they’d run out of money and their café wouldn’t survive (i.e. their city in the superhero example wouldn’t be protected). We then considered all the potential costs for the café (e.g. buying the fish, wages, rent, advertising) to focus on how much to sell the fish dish for. After this they agreed on a price to sell their fish for which would result in an expected profit in the future. We then discussed that they should check-in over time to see if anything needed to change. This exercise really supported them with starting to look into the future and this skill will no doubt help them later in life if they continue to use it. Budgeting is a moat George S Clason, the author of the amazing book, The Richest Man in Babylon, refers to a budget as being a moat around your savings. If you don’t have this moat, then your expenses are likely to increase and attack your savings. This is exactly what is happening to many adults today. They don’t know how much money they have, or how much they are spending, and as a result they overspend. The vast majority of us will automatically do some quick mental math budgeting by considering how much we get paid and deducting large expenses we need to pay out (e.g. rent/mortgage, council tax/utilities, school/kids activity fees, car repayments) but in most cases we will still potentially miss a relatively large expense and underestimate the combined impact of all the small expenses we make every day.


First step to building a moat - Start kids off forming a very simple budgeting habit If you have ever tried to budget yourself, you’ll know that it is notoriously boring. There are lots of apps that help but most people lose interest in those after a while and stop using them. My recommendation is to start really simple. I encourage you to get your kids to add up how much money they have at the end of each month. This includes any money they have in a piggy bank, regular bank account and long-term savings accounts. At this stage, there is no need to do anything more than them recording how much they have (make sure they are doing this, not you). Knowing how much money they have is one of the three essential habits I believe all parents should be helping their kids form. This very simple and easy habit will help them focus on how much they have and how this changes over time. If they see that their money is growing then they are more likely to want to keep it growing. If they see if hasn’t grown, they are likely to want to start seeing it grow. They should then start to ask questions about why their money has or hasn’t grown, prompting them to consider what they have been doing with their money. When kids ask about those changes it means they are likely to be doing more to mange their finances than many adults do today.

Remember “What gets monitored, gets managed”.

By knowing what they have and how it changes over time they can start to consider what changes to make, i.e. they start to learn to develop the financial version of the Superpower, Clairvoyance, which I discussed at the start of this blog. Second step is to delay their gratification To make sure they do see their money grow over time, they need to also form the two other essential money habits. The second is to save at least 10% of all the money they receive, no matter how small. If they can form this habit and carry it on into the future then they are very likely to become financially secure. The last of the three essential habits is to get them to save up for something they want. This forces them to avoid spending all their money now and starts them forming a savings habit. They will learn to make a choice between wanting something now or waiting for something better in the future. This is a really hard choice but the more they delay their gratification the better they will be with money when grown. To help your kids learn some basic budgeting skills and delay their gratification, below are two great examples tried by parents which I thought I’d share: 1. Screentime tokens: One idea from Robert Gardner, founder of RedStart, is to give kids tokens which will allow them to watch a bit of TV each week. As they only have a certain amount of tokens, they have to budget when they want to watch TV and for how long. One token for a short cartoon or three tokens for a movie as an example. This can work on very young kids and helps them learn to spread out their spending. 2. Lockdown snack menu: Another idea from mum of two, Laura Symonds, is to create your own lockdown snack shop for your kids. Like the token idea above, kids are given a small budget to spend on snacks at home each week. They then have to choose when and which snacks they want. As you are the shop keeper, you can set the price. Below is Laura’s menu. It has healthy snacks costing a lot less than naughty treats (it’s a shame that isn’t always the case in reality).

Both of these examples start to help your kids learn about budgeting. Make sure you help them look into the future so they don’t spend all their ‘budget’ straight away. If they do, however, you need to stay strong and help them learn that once it has gone, it has gone (like in the real world). This is where they will really learn about the pain of not budgeting, a vital life lesson.

The Blue Tree Habit Maker

To help parents teach their kids how to form these three essential money habits, we are creating the ‘Blue Tree Habit Maker’ tool. This tool will allow kids to record their money and see their Blue Tree forest grow. Importantly, it will provide a check-in to make sure they are in fact forming good money habits when they receive money. All this whilst also providing financial education tips each time they log-on.


The tool will be launching in a couple of months. If you are interested in learning more about this tool, whether for yourself, your clients or your employees, please register your interest here and I’ll send you more details as things develop.

Last word


Start helping your kids learn the critical life skill, budgeting, which so many adults today wish they had learnt from when young.

  • Get your kids to utilise their Clairvoyance superpower by looking into the future to keep their city (their finances) safe. 

  • Get them to regularly record how much money they have, to save at least 10% for the long-term and, to save for something they really want. 

By seeing their money grow, stay the same or reduce, they will come to appreciate what actions need to be taken to grow and protect their money.  These learnings will ultimately help them to have a more financially secure future.

Thanks for reading!

Will (subscribe)

What to read next? The three essential money habits

Recommended book: The Richest Man in Babylon by George S Clason

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