Teach Your Child to Budget With These Seven Tips

Whether they’re heading to kindergarten or to college, now is a good time to teach your children how to budget. Learning how to live within their means early on will help them manage their money throughout their lives. Use these seven tips to get started.

Create A Budget

The best way to teach children how to budget is to have them help you make one. Depending on their ages, there are several ways to introduce budgeting basics.1 Some examples include:

  1. Using the cash-in-jar system (glass jars with enough cash to cover one month of each spending category) or, similarly, the envelope system. Use this for household expenses such as groceries, entertainment, gas and gifts. When the jar (or envelope) is empty, no more spending for the month.
  2. Sharing your household budget with older kids to give them a realistic idea of the family’s actual expenses. This is a good time to discuss the differences between needs and wants.
  3. Helping a young adult create his or her first budget using an online tool or basic spreadsheet. Encourage them to slightly overestimate expenses and underestimate income at first so they end the month with a small cash surplus instead of a shortfall.2

For more information on free budgeting tools, visit the U.S. Department of Health and Social Services’ Assets for Independent Resource Center and Federal Student Aid’s Budgeting Tips.

Plan For Emergencies

Sometimes we face unexpected expenses. Encourage your kids to start an emergency fund (also known as a rainy day fund), and include regular contributions to it as part of their budget by including a “save” category. Ideally, their emergency fund should grow to cover at least three to six months of living expenses.3

Check Your Spending

Once a budget has been set up, remember to help children review their spending to see how well it matched their estimated expenses. This can help them see if they should increase or decrease the amount allotted to a certain category.

One of the benefits Discover cardholders enjoy is access to a Spend Analyzer. This online tool provides a customized report of how you’re spending money based on credit card purchases, and may help to identify problem spending areas.

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Use Payment Alerts

Whether your kids are college students or navigating their first job and living away from home, life gets busy for young adults. If they’re new to using a credit card, show them how to avoid late payments and overspending by setting up customizable email reminders or mobile alerts to pay their credit card bill. Discover’s Email Reminders helps members keep up-to-date on account activity, and sends a notification when a payment is due, or if a transaction or balance exceeds a set amount. This can help your child stay on track with a budget.

Automate Payments

Another trick to sticking to a budget is to automate as many payments as possible so you don’t “forget” to make them. Cell phone, internet, cable and loans often have options to send an automatic payment from your bank or credit card once a month. Use a service like Discover’s DirectPay to make an automatic monthly payment.

Use Credit Wisely

If one or more of your children is old enough to get a credit card like Discover it® Chrome, remind them that, while a credit card is useful for emergencies during college, it should never be used to live beyond their means. Yet if this does happen, it’s important to include paying down credit balances as part of a budget. Use a tool like Discover’s Paydown Planner to calculate how much to plan on paying each month.

Budgets work best when they’re realistic. Remind your children to review their spending against their budget every couple of months, and don’t forget to do the same for your own budget.


1. http://idaresources.acf.hhs.gov

2. http://studentaid.ed.gov/sa/prepare-for-college/budgeting/budgeting-tips

3. http://studentaid.ed.gov/sa/prepare-for-college/budgeting/creating-your-budget#save

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. 

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