Did you have a play cash register as a kid? The everlasting popularity of this classic toy reflects children’s desire to learn about money by imitating the adults around them. Since financial management is an essential skill for success in the job market, it is important to start talking about money with your child at an early age. Learning to budget is a key step in this process. Here are a few tips for teaching your child how to budget.
As soon as your child realizes that you have to pay for the things you own, you can start teaching them about budgeting. First, introduce basic financial concepts such as expenses, income, savings, and financial goals. Approach each topic in a positive, transparent way, giving your child concrete examples that relate to your family’s finances. This open approach will help them understand the value of money and build essential financial skills from an early age.
Everyone knows that children like to imitate adults, especially their parents. This is why they often want to watch you do things, like make a budget. Take advantage of this curiosity to reinforce their understanding of financial concepts you have already covered together. When reviewing your budget, consider involving your child in the process. You can use our simple budgeting tool and explain how it works as you go. If you need help, watch our video (in French only) on how to make a personal budget. Involving your child in the budgeting process will help them learn about financial management and develop valuable skills for the future.
To help your child learn the difference between a want and a need, talk about your own short- and long-term financial goals. Use the budget you made together to decide what steps you need to take to achieve them. To develop your child’s patience and sense of financial discipline, encourage them to follow your lead by setting a financial goal of their own. Then, help them think of some strategies to save enough money to reach it. This will teach them the value of planning and perseverance in managing their finances, skills that will serve them well for the rest of their lives.
Once you have made your budget using the budgeting tool, you will need to test it out to see how realistic it is—in other words, whether it allows you to save enough to reach your financial goals. To do so, follow these steps:
Keep track of your bills and actual spending for a month. At the end of the month, compare what you spent with what you budgeted. Identify any mismatches and determine whether you have managed to stick to your budget or need to adjust it.
Explain to your child that it is perfectly normal to check their monthly budget regularly and adjust it for life’s surprises and unforeseen events. This will help them understand the importance of flexibility when managing their money and develop a proactive approach to achieving their goals.
Repeat this process regularly with your child to get them involved in managing their own finances. This will teach them the value of financial planning and help them develop the skills they need to make informed financial decisions throughout their lives.
As you work toward your respective goals, cheer each other on and use savings strategies that help you stay motivated. Here are a few tips to encourage your child to save:
Use a transparent piggy bank. Watching their money physically pile up can help your child stay motivated to save. Remember: help them keep records of how much money they have saved. If you want to teach your child to count their own money, we suggest playing The Allomarket game to help them practise their math skills while having fun.
Talk about money while you shop. When you are out shopping with your child, take the opportunity to show them how to compare prices, look for special offers, and use rewards cards and coupons to save money. This practical experience will help them develop budget management skills and understand the importance of making informed decisions when shopping. By involving your child in this process, you are passing on essential financial values.
Open a savings account. If your child is old enough to have a bank account, consider opening a savings account for them. This could help them resist the temptation to spend the money they are supposed to be saving toward their goal. Depositing their savings in a savings account will also teach them how their money can earn interest in the long term. Through this experience, your child will learn the value of patience and planning, important skills that will help them build good financial habits.
Celebrate their accomplishments. It is important to celebrate your child’s success not just when they reach their goal, but also as they hit milestones along the way. Celebrating even the smallest accomplishments makes a big difference! When your child is praised for their effort, their self-esteem gets a boost, and they are more likely to stay motivated to save and be smart with their money. They will also feel a sense of pride and be reminded of the importance of setting financial goals and working diligently to reach them.
By openly discussing healthy financial habits with your child, you are building a trusting relationship and passing on a valuable life skill. In addition, you are giving them the tools they need to make informed, independent decisions about their money as they grow.