Not long ago, our grandson earned his very first paycheque. Now, to be fair, he is only four, but he was so excited. It wasn’t a lot of money, but enough to recognize this was a golden opportunity to discuss the concept of money and understand the value of a dollar.
I could tell he was intrigued and yet not fully comprehending. But what he did understand was that he would get to save some money, spend some money and give a little away.
Why Teaching Money Management to Kids Is Important
Whenever I talk about budgets, people get a distasteful look on their faces. I want that to change with our grandchildren. I don’t want them to think about budgets being a restriction; I want them to believe they are about freedom. I want them to understand that the financial choices they make today will support their goals of tomorrow.
When I was growing up, money wasn’t really discussed at the dinner table. You learned by trial and error, often the hard way. I would like our grandchildren to have a different experience, one where money is a tool, not a mystery.
Budgets can give them a sense of control. They aren’t about saying “no” all the time, but about making conscious choices.
Teaching Kids Money Management with the 50/30/20 Rule
If your grandchildren are a little older than mine now, it’s a great time to start with the basics. If they earn $100 in a month, where does it go? Encourage them to write it down, or use an app, whatever makes it real for them.
When our children were younger, we introduced the 50/30/20 rule. Even at a young age, this simple framework was easy to understand.
- 50% needs (school supplies, phone bills, essentials)
- 30% want (fun with friends, treats and small splurges)
- 20% savings (for bigger goals down the road)
Of course, percentages can be adjusted to fit the situation. The point was to introduce balance. This will be the framework we introduce to the grandchildren as well.
How to Help Kids Set Personal Savings Goals
Goals also come into play.
I remember our daughter getting her first pay cheque, and I was so excited for her and told her what she should save her money for. She promptly said, “Stop.” That doesn’t excite me. Why should I save my money for that? She had a point. Children are often more motivated by something they want than by abstract financial principles. Is it a bike? A gaming system? Or in our grandsons’ case, it was a drone. When they connect savings with a personal goal, the discipline and work feel worth it.
We also encouraged our children to save by celebrating small wins and plan to do the same with the grandchildren. For example, if your grandchild saves $10, match it with another $10. These small gestures reinforce the habit of saving and can make the experience fun.
While I like the idea of teaching numbers, we realize we were also teaching confidence and control.
As grandparents, sharing stories from our financial journey can be powerful. Let them know you’ve had to make trade-offs.
The truth is, at the end of the day, building a budget together is less about dollars and cents and more about time spent together. Because in the end, the numbers will fade, but those conversations? They last forever.
