How to Make a Budget: Lesson for Kids

Instructor: Deb Maxwell

Deb has an MA in education and 15 years of elementary classroom experience.

A budget is an incredibly useful tool for tracking money earned and money spent. In this lesson, you'll learn how to make a budget and use it to help you make smart decisions.

How Do We Know What We Can Afford?

Have you ever asked your parents for something and been told they can't afford it? It might seem like they are being dishonest. You know they have a credit card, debit card, or cash. How can they literally have money in their hand and tell you they can't afford something?

People make decisions about what they can afford, or have enough money to pay for, based on a budget. A budget is a tool for managing money. Once you understand how budgets work, adults will make much more sense to you.

Calculating a Budget
Budgeting

What Is a Budget?

A budget is a document that lists the money you earn and the money you spend over a particular length of time. It is common for a household to have a monthly budget and a yearly budget. A budget starts with the amount of money you have and the amount you expect to earn. Then you subtract the money you spend. The money you spend can be divided into two major categories: needs and wants. You subtract the needs first, then you start subtracting wants.

Budgets aren't just for grown-ups. Kids can make budgets, too. Budgets can help kids figure out how to get the things they want.

Example of a budget. Expenses are red.
example budget

A Kid With a Budget

Imagine you have a friend named Peyton. Peyton is going into 7th grade. Peyton gets an allowance of $25.00 a week, but that money has to be used to buy lunches on school days. A school lunch costs $2.50 a day and is considered a need. Peyton's budget starts out like this:

$25.00

-2.50

-2.50

-2.50

-2.50

-2.50

_____

$12.50

After Peyton's needs are met, there's $12.50 left. There is a very cool BMX bike for $130.00 that Peyton wants to buy. The budget shows that Peyton has $12.50 left after meeting the week's needs. That isn't enough for a bike, but by using the budget, it's possible to plan for the future. By adding the weekly profits, it's possible to figure out how long it will take to save $130.00. How many times will Peyton need to earn $12.50 to get to $130.00? This is where it really helps to understand math.

$12.50 x ? = $130.00 or $130.00/$12.50 = 10.4

It will take 10.4 weeks for Peyton to earn enough money. Peyton only gets paid one time a week, so it will take 11 weeks, and there will be a small amount of money left over.

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