Chinese New Year is coming so the kids are going to receive red packets as gifts. These are considered lucky money, but it also means they get hold of real money. Here are some simple things to do to introduce the kids on the concept of how to budget money.
- Related: Chinese New Year Family Adventures
How to Budget Money for Kids
Our kids, now ages 8 and 4, have been exposed to the concept of money ever since they started to talk. We are pragmatic people and we also would like our children to exercise prudence. Read our story in the link below.
One of the aspects of financial literacy for us is learning how to budget money. A lot of people do not have the faintest idea of budgeting, which is the reason why we have grown-ups who are one-day millionaires.
When Kids Get Hold of Money
At some point in their young lives, kids will encounter money. It can be in the form of allowance, prize for their achievement, or gifts. Since we are homeschooling in Bacolod, our kids do not get a daily allowance.
- Related: Bacolod Homeschoolers Network
But they do get money gifts on their birthdays, Chinese New Year, and Christmas.
Last Christmas, the kids got some money gifts from family and godparents. The first one that they got was P3000 from their Lolo Tito, which means they get P1,500 each. So here’s what we did.
Teaching Our Kids How to Budget Money
Here’s what we did with their Christmas money. The steps are just simple, so you can do it with your kids easily. If you have other helpful ideas, please share them in the comments below.
Tell Them How Much Money They Have
The first step with budgeting, both for us and for kids, is to know how much money you have. The kids know that, along with where it came from, before we did anything else. For this particular purpose, they know that each of them has P1,500.
Let Them Know that Things Cost Money
The kids need to know that all their things, including food and vacation, all cost money. Like our recent vacation in Hong Kong, the kids saved up for it for years before they finally got on the trip. They just kept putting money in their coin bank. They should not be made to believe that Papa and Mama just get things from the mall or the supermarket but that we buy them with money.
Part of budgeting is teaching them about needs and wants. It is not practical to just tell them to save their money because that’s not reality. We all need to buy stuff that we need or like. It’s a matter of knowing how to use money properly.
Give Them Choices
We told the kids that they can spend some of their money and they can keep the rest. We asked them what they wanted to buy while being prepared if they have some outrageous plans (last year Shane wanted to buy a car and a tricycle). Dindin decided on a dress because she said she “needed” it. She is growing fast and we realized last November that a lot of her dresses have already become too tight.
Meanwhile, Shane didn’t really need anything so she was allowed to buy a toy. And she chose a Shopkins blind bag.
Carrying Out the Plan
So Dindin decided on buying a dress, as it is a current need. I asked her how much we should set aside for the dress. She decided on P300. As for Siobe, she only wanted the two-piece Shopkins blind bag, which costs P149.75.
With this plan, we went to The SM Store.
Since Dindin had a budget, we only scoured the discounted dress racks. We found several that were anywhere from P300 to P350. It was kinda difficult looking for what we liked, what would fit our budget, and with a size that was perfect for her. But we were determined and we finally found the perfect one at only P300.
As for Siobe, it wasn’t hard, as she just picked a Shopkins blind bag.
Lay Down the Consequences of Each Choice
Now, the kids were able to buy what they liked and within the budget they set. After that, what happens?
So I told them that from their P3,000, they spent a total of P450. They still had P2,550 left and they decided to save it for travel and for their college fund. Dindin said that P1,000 shall go to their travel fund while the rest will go to their college fund. And that is exactly what we did.
All these steps just mean that they are responsible for their money. We can just easily go shopping with all their money gifts, but we opted to teach them how to budget money this way. We still had fun shopping, they enjoyed their purchases, and they still had some money left.
Into the Bank
The kids received more money the rest of the holiday season. But since they already got what they wanted, they didn’t ask to buy anything anymore. We decided to keep the rest of their money instead and divided them between travel and for their college fund.
How about you? Can you also share some tips on teaching kids how to budget money?
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That is a good practice! I love it when kids know the value of money and how they will allocate it to their daily expenses. They will carry that practice till they grow up.
Yes Emman! We would like to see our kids getting responsible with their money. 🙂
GReAT way to instill savings at a young age,they sure will learn how to value and handle hard earned money when they grow up.
Great practice. Similar to what I do for the boys. I give them a set budget for gifts only on Christmas and their birthdays, and they can spend it however they want. The rest goes to their savings naman.
This is nice. Worth reading. Dream is starting to save also. We learn a lot from this blog. Thanks for sharing!
This is brilliant since it is very important to educate kids about money and budgeting early in life. It will help them create excellent spending habits and the right budgeting attitude which will be crucial as they grow older. Thank you for sharing this wonderful tips, Mommy Sigrid!
Welcome! These things should really start at home because budgeting is not taught in school!
Thanks for sharing and tips! I love the idea of letting them help saving for college fund. 🙂
Yeah, so that they have a sense of ownership. There’s greater fulfillment. 🙂
This is really useful advice for all parents! It is so important to teach children life skills like budgeting their money. My daughter is 9 years old and we talk about this kinds of things a lot.
Financial discipline starts from a very tender age. It is not a new concept coming across grown ups who don’t have financial discipline. Thus, I find this article worth it! Teaching kids the importance of creating budgets for the amount they get or save up is very important. In today’s era, kids kinda know too much about money thus such skills will come in handy!
I recently set my daughter up and ISA as well as buying her a piggy bank. It is so important to teach them from when they are young to manage money.
Giving the kids options to choose from is so important in teaching them to budget their money. That way they see they have a say and will be able to live with the consequences of their actions!
I learned the value of a dollar early on. It helped me avoid financial pitfalls later on in life. This is why I strive on teaching my children how to budget money.
Good for you! 😀 Keep it up. Cheers to raising financially savvy adults.
Love this idea of teaching kids how to budget money. I wish I was taught this at a young age. This will be useful for the kids and for parents to teach their kids this.
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I do the same with my son, teaching him how to budget his money! I think this is such great practice, especially because for some of the kids that I know, they just get everything they want. They turn out like brats and that’s just not the way to go. Teaching them early about the value of money really helps!
It is so important to start teaching them to be responsible with funds while they are young. Such a smart thing to do, teaching kids how to budget their money! 🙂
I think it is important that children learn from a young age that it is important to understand money and try and budget. After all, it will help them so much in adult life. It is definitely an important life skill.
You’re never too young to learn about money! I remember my parents would make me save my money from holidays but I could do what I wanted with my allowance.
I taught my kids the value of money through example and hard work. They “earned” their allowance. Chores, errands, academic awards were given incentives. It gave them the idea that nothing is free. If they want something, they should work hard for it.
That’s awesome Anne! Yes, money values should be instilled. Otherwise, we will be the ones getting the headache when the time comes.
Great tips! I think teaching our kids the value of money, and how to budget money, is such a valuable skill! I definitely try to teach mine as they grow.
I love the idea of teaching kids to budget from an early age. I really think it is something they should be learning in school! But it not, then it should be taught in the home. This is such a great post.
This is a very important thing to teach kids and you are giving some really good advice, e.g. to make clear the consequences of spending. As always, I think that here, too, it’s important to be a role model.
This is such a great post and very informative. Loved this kind of article very useful for teaching our kids about life.
These are such fab ideas. I was always taught about money from a young age and am very savvy in my adult years. I think it’s so important!
Ami xxx
I love the tips here. My kids are starting to understand the concept of money as well so I could really use these tips.
Yes, financial literacy is important. So many people get credit cards once they turn 18, and don’t know how to behave with them.
It’s so important as a parent to teach kids the value of money and how to use it efficiently. Good tips to learn.
I think giving them a bunch of choices is such an important thing in teaching money management or they just don’t know what to do. These are great things to think about when it comes to teaching financial literacy to kids which is essential.
Exactly. It’s empowering to the children when they are given choices and be able to make them on their own. They will also learn to see the consequences of the different choices that they make.
Great tips & advice. It’s very important to teach kids the value of money & how to use it properly. Thanks for sharing mommy.
Great tips Mommy, thanks for sharing this.Worth reading this.It’s very useful for us, let’s teach our kids the value of money and ways to save it.
It’s so nice to know that kids know how to budget and save their own money at their very young age. It’s our responsibility to teach abd guide them how to do ❤️