Helping Your Child Set Up a Budget


Nobody really likes the big “B” word…budget. Budgeting isn’t typically fun, and many adults struggle with budgeting. Unfortunately, our children will learn a lot about money from us, so if we aren’t good at budgeting and handling our personal finances successfully, it will be extremely hard for our children to learn how to do so. By learning how to teach your kids how to budget successfully, you will probably realize some ways to improve your own at the same time!

Previously we discussed why budgets typically fail, why having a budget is so important, and how to begin setting financial goals. Now let’s dive deeper on how to set up a real budget with your child.

Reminder: If you are just getting started on paying your child an allowance and wondering how much to pay, a simple plan to start is making their weekly allowance equal to their age. Thus, a 5-year old has the chance to earn $5 per week, and a 9-year old can earn $9 per week. Click here for some other past FAQ’s we’ve covered.

The Three Parts of a Budget

  1. Savings
  2. Giving
  3. Spending

With your child, take a piece of paper and draw two vertical lines to create three equal columns. At the top of the first column write “SAVINGS”, then write “GIVING” at the top of the middle column, and “SPENDING” at the top of the right-hand column on the paper.

spending-diagramTogether, decide how much money will go into each column from their weekly allowance. If it’s easier to start by explaining how the percentages work, do so. For example, you might help them decide that 20% of their money will go into the SAVINGS bucket, 10% into the GIVING bucket and the remaining 70% will be available for spending.

Then, show them in real dollars how this will work. Let’s assume you have a 9-year old daughter (like me!). (HINT: Be sure to get change next time you’re at the store to make this easier.)

On the piece of paper, calculate out with your child the actual dollar amounts from their allowance that will go into each column. Taking my 9-year old daughter, for example, would mean we would write $1.80 to go into SAVINGS each week. Then, 90 cents would go into GIVING, and the remaining $6.30 would be available for SPENDING.

Then, on your pre-established PAY DAY, help them divvy up the amounts into three separate piggy-banks, or clear plastic baggies, or clear jars. It’s great when they can see their money grow.

Keep in mind that even though they only put 90 cents into GIVING, the ultimate goal is to establish a life-long habit of giving to others and feeling great about being involved in charitable activities.

Don’t get too caught up yet in short-term versus long-term savings, as well as the various types of “spending” money. That will come later once you’ve established this fun and simple way to help them learn how to successfully budget!


About Trevor Hammond

As a veteran of the mortgage industry, Trevor Hammond is the co-author of "Borrow Smart, Retire Rich," a Certified Mortgage Adviser and a founding Faculty Member and Contributor to the National Institute of Financial Education ( And he has provided thousands of homeowners with the clarity and confidence to make smarter decisions when it comes to their mortgages and money. In 2013 he launched an entirely new kind of mortgage company: Aspire Mortgage Group, which is committed to educating and empowering homeowners to increase savings, eliminate bad debt, and safely increase net worth. The specialized group of mortgage professionals at Aspire Mortgage Group have redefined what homeowners should expect from a mortgage company. To learn more about Trevor Hammond and our team of mortgage advisors please visit our website at or email Trevor directly: Aspire Mortgage is a Sierra Pacific Mortgage Partner.
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