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This is the best time of year to teach our kids about budgets. While they are going crazy over the latest trend they just must have, we are going over our bank accounts to get an idea of a realistic vision of Christmas. Don’t worry if you can’t buy everything on their lists. No one can. This is why we don’t lie to our kids about Santa. Read more about that.
It’s time to sit down with your kids and explain what a budget is, why we use them and do some fun activities about budgeting together!
How to Explain a Budget
This depends on how old your child is. For our youngest, I just explain it as a plan for where to use our money. For our oldest, I explain it as deciding down to the penny, including tax, how much money I am going to spend on each child, wrapping paper, bows, stockings, and stuffers so that when I go to the store, I know exactly how much I need and don’t overspend.
Why We Need a Budget
This is the part that it is hard for children to understand. They get swept away in the festive and generous aspects of the season and don’t see a reason to worry about tomorrow. I always explain that even during Christmas we must show self-control and spend our money wisely. This teaches them to decide priority on their lists quite strictly and is a good way to teach want vs need.
Energy, Contentment, and Priorities
Kids don’t really understand how we earn money. Sure, they realize that most parents have to work. They understand that we have to trade money for things, but I doubt most kids realize that parents trade their time and effort for a few dollars an hour. And they definitely don’t realize that our paychecks are for limited funds.
We teach our kids to (and ourselves) to view money as a symbol of energy. This is a habit we learned from Your Money or Your Life (read my review here). A gallon of milk isn’t $3. It’s 7 minutes of work. A $100 toy isn’t $100 its almost 8 hours worth of work. When you put it in terms of “I have to work an entire day to afford this” everyone can view money in a way that better represents what money really is.
Use this as an opportunity to teach your children about priorities and contentment. Teach them to evaluate their priorities You can encourage them to think about what toys they want the most. Get them asking questions like:
Which toys will I have the most fun with?
Which toys will I play with the most?
Which toys can I share with my friends?
Get them to figure out what things are most important to them and select toys with those qualities in mind.
To teach contentment, remind them that they can’t have everything they want, but they can definitely have some things that make them happy. Explain how priorities can help make sure their choices are ones that can keep them having fun for a long time.
Evaluating priorities and contentment are both skills that take some practice, and failure, to master. Don’t expect kids to get them right off the bat, but start working now so they learn them by adulthood.
Contentment and evaluating priorities are integral parts of strong character. I recommend taking character education seriously even if you don’t choose to use a curriculum. If you would like me to make a list of free resources for education, please leave me a comment. I have already composed a short explanation on how I teach character using books, movies, and stories.
To facilitate your endeavors, I have created 2 worksheets that will help you teach your kids about budgets and why we need them. Sign up for my newsletter below to get your free printables.
The first one for kids in Second Grade or below is set up using candy canes instead of dollars so they can see how to set a budget.
The second one is for older kids. It’s a wishlist, complete with a price column so they can see how fast things add up and practice prioritizing their spending. I have even added a section for tax if you wish to fill it out with your kids.
If you haven’t started teaching your kids about money or character, it’s never too late to start! If you have no clue where to start, here are some resources that I use to teach my own kids!
Money Bags is a quick money counting game. This is how we taught Connor to count money and make change.
We have been using Cash Flow for Kids to teach Connor more about income and passive income, starting businesses, and how to invest time and money to create wealth. Watch us play below!
Use toy money to let kids explore the roles of customer and cashier. You can also play all kinds of games like putting many coins in a cloth bag, picking one out, naming it, and the one with the most coins at the end wins! If you would like me to make a list of all the ways you can use play money in your homeschool, please let me know in a comment.