Teach Kids How to Budget
Teaching kids how to budget is essential. It’s a skill they’ll use their whole lives. It’s a great way to start kids on a financial independence path and make your kid a millionaire.
Many adults need to learn how to budget. If they don’t, their lives can become more difficult as they build debt. That means they spend much of their paycheck simply paying interest to the bank.
Fortunately, when you start teaching younger kids, they can build good budgeting habits before bad ones set in. One of the problems with teaching budgeting is that it can be quite boring to kids. Kids are often a little interested in how much things cost, but they don’t really want to know where the money goes.
They’d rather play a game. So let’s give them what they want – a game!
Budget Project for Kids
In my son’s fourth grade class, the teacher used this specific Wants and Needs Budget Project. It’s free from Teachers Pay Teachers. Since this one is free, maybe I should call it “Teachers Don’t Pay Teachers.”
The student is “hypothetically” dropped off on an island. They are given $1450 to spend but must get needs (shelter, clothing, food) and wants (entertainment such as internet access, game station, tablets, streaming service, Legos, dolls, etc.)
The shelter has three options: a mansion, a house, and an apartment. The mansion has entertainment, such as a movie theater and playground. However, it eats up most of the budget.
There are two clothing stores: a fancy store and a normal store. According to my son, very few students picked the fancy store. Given the context of being dropped off on an island (presumably alone), why would anyone choose the fancy store?
Next, the kid has to pick out food to bring to the island. Most kids will pick a lot of their favorite foods.
The problem with the food and clothing instructions is that there needs to be an indication of how much to bring. You have to eat and wear clothes for a month. If you choose to spend $6 on bacon… is that going to last a month? It’s unreasonable to expect anyone to know exactly how many shirts or pants to buy. Does the housing have a washer and dryer for laundry? Shoes are a clothing option. Do kids need to buy shoes? Or can they skip them since they are likely already wearing shoes when getting dropped off on the island?
The teacher (or parent) should provide some guidance on how much to buy of each. Perhaps the food should be normalized to a 30-day supply. Or maybe the food should be simplified into three choices: a meager (bread and water) tier, a middle tier, and a fancy tier (a 30-day supply of their favorite foods)
Finally, there is the “Want” store. This is the fun stuff that kids love. Kids can buy art supplies, game systems, tablets, internet access, streaming services, Pokemon cards, Legos, books, etc.
I wish I knew what my son picked for his “wants.” Maybe he remembers, and I’ll update this article later. If it were me, I’d go with the Kindle, internet access, and a streaming service. I would choose Netflix, but I bet both kids would choose Disney+.
Final Thoughts
The creator of this budget project specifically noted that it’s useful for math. I think the idea was to create an interesting scenario for kids so that doing all the addition isn’t dull. That’s probably why all the foods are listed separately rather than three plans. It’s more math to add up the cost of bananas, chicken, and bottles of juice than it would be to choose one price for a tier of a food plan.
There may be better tools to teach financial literacy than this budget project. However, it’s a great introduction to financial literacy.
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
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