Money and Budgets – Can Kids Manage Them?

Back in the Day: When Money Meant Not Having to Eat at Kid Friendly Restaurants

Way, way, way back in the day when Princess Di’s poofy-sleeved wedding dress was still in style and money or budgeting or kids meant little to me I got engaged. And as all proper engaged girls do I got every wedding magazine available to me to help me plan my wedding. As I was perusing the magazines, caught up in the beautiful wedding photos of over the top flowers, cake, and kids in grown up dresses and tuxedos, I kept coming across this one piece of advice about money management and budgeting.

Set your wedding budget now, back it off by 25%, and try to spend only that much money.
The theory was that you might if you were really, really good at managing your budget’s money and were exceptionally lucky you might spend 100% of your budget. So, I followed this advice, figured out how much money my parents and I could afford to spend, and set our wedding budget. Amazingly we ended up right at our spending limit.

Present Day: Where Kids Think There Are Real Money Trees

Money and Budgets - Can Kids Manage Them

So recently one of my kids turned 10 years old. In our house the rule is that kids only get the big birthday parties up to 10 years old. When you are 11 and up you have to be happy with simply cake and presents. Knowing this rule my daughter started coming up with all sorts of grandiose plans for her party. They were nothing like when my son at 9 asked us to rent out the stadium at Oklahoma State University for his 10th birthday party (you have to almost admire his gumption), but they were big nonetheless.

As my husband and I started to sweat I remembered my wedding budget and suggested that we come up with something similar. After some discussion and research concerning what we had spent on previous year’s birthday parties, we presented our plan to our daughter. The conversation went something like this.

Introducing Money and Budgets to Kids: Presentation is Everything

Me, “How would you like to have a shopping spree for your birthday?”
Her, “REALLY? Yeah! But I want to spend a lot of money.”
Me, “How much is a lot?”
Her, “$30?”

After my husband and I tried super hard not to die laughing I continued.

Me, “How about this? How about we give you a budget of $300 for your birthday party. You and I together will plan and shop for the party. Any money you have left over you can go on your shopping spree with.”
Her in tears, “Why are you doing this to me?!?”

It was at this point I realized that she really didn’t understand how far money goes (and my presentation skills stink). In her mind she was going to end up with nothing (and her mother was perhaps the meanest mother in the world). But after my husband and I talked her down from the ledge, we got to planning.

Planning Her Last Big Birthday Party With a Budget

Money and Budgets - Can Kids Manage Them

She decided to have a sleepover with 6 guests. At the party she wanted to have a XBox Just Dance 3 Dance Off (a game she had gotten for Christmas a couple of weeks before and most hilarious to watch), pizza, drinks, snacks, a movie rented from Netflix, cupcakes from her favorite and most expensive bakery, and eggs, donuts, and fruit for breakfast.

It was interesting watching her process through the choices available to her. She actually picked a more modest style of party with less guests once she looked at the costs involved with other more expensive party options. She asked about using coupons or discounts, and we found two Groupons for her expensive cupcakes. She did things like choosing donuts from the grocery story for breakfast rather than donuts from a more expensive location. She chose to give one grand prize for the dance off instead of giving prizes to everyone. And finally she decided she simply didn’t need the super fancy bows on top of her cupcakes that cost $4 a cupcake.

Here were the final numbers for her party.

Money and Budgets - Can Kids Handle Them?

As you can see she ended up with $139.50 for her shopping spree, more than I expected, certainly more than the $30 she had asked for. She was extremely happy, and said it was the best birthday ever. I was impressed with how quickly as a 10 year old she took on her budget and mastered it like a pro coming up with creative solutions. And from this exercise I learned one important lesson.

Don’t underestimate the ability of your child to master their money or budgets.

Sometimes I think they might be better at it than we as adults are. And now that the party is over it is going to be interesting to see how well these lessons cause her to look at the financial world around her. I can hardly wait.

Kelly K.

About Kelly Kinkaid

Kelly Kinkaid, professional blogger and freelance writer, enjoys writing about such topics as stretching a dollar, personal finance, diet and fitness, and living a life well lived. She spends all of her spare time in her many roles including but not limited to soccer, basketball, swimmer, band, and piano mom, runner and wife. You may also contact her on Twitter as @Kellyology, or on Facebook.


  1. LynneFinch says

    Kids can do amazing things when we give them the chance. Your birthday party experience shows what we also learned as parents when we gave our kids control of money. In our situation our kids had a variety of “expenses” such as school supplies that they had to pay for. If they met they requirements but didn’t spend the total amount, they could keep the rest for themselves. We negotiated a spending amount for different types of spending (clothes, entertainment, etc.)   and transferred the money to them. If you’d like to know more about this approach, visit my blog, “Kids and Money” at

    • Kellyology says

      We went to Target and in less that 45 minutes she filled 3 bags filled with CD’s, tween magazines, a neon orange purse, a couple of toys, and accessories, accessories, and more accessories (she found a sale rack filled with bargain accessories).  I was impressed by her ability to spend so much money so quickly. :)

    • Kellyology says

      Is budgeting genetic or is it a learned skill taught by living in house in which budgets work? That’s an interesting question. I have to say I have two very, very different children and both of them know how to manage their money pretty well. Sure they each have different priorities when it comes to money, but yet each of them are thoughtful spenders. So from personal experience I would probably have to go with the theory that budgeting is a learned skill that anyone can learn if given the chance.


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