3 Things I’ll Teach My Kids About Money (Part 1 of 3): Budgeting

Every parent wants their children to grow into adults who handle money wisely and live with purpose. But those abilities aren’t inherited, nor are they passively absorbed. They’re taught through intentional experiences and everyday examples that help kids connect choices with outcomes.

For investors hoping to pass on financial wisdom as well as wealth (and believe me, the second won’t last long without the first), three habits rise to the top: budgeting, investing, and giving. Together, they help children understand not just how money works, but how to manage it with intention.

When it comes to budgeting, it isn’t about spreadsheets or apps, it’s really about priorities. When kids learn to decide what matters most before they spend, everything else becomes easier. Budgeting becomes less of a rule and more of a rhythm, a way of checking their wants against their values. So first reinforce exercises that allow them to decide what matters most:

How do you teach it?

• Use the Three-Envelopes Method. Label envelopes (I prefer cash over digital “buckets”) for key categories like “Spend,” “Invest,” and “Give.” The visual structure, and tangible use of cold, hard cash makes budgeting concrete.
• Let Them Plan for Something Fun. A simple goal like budgeting for a new toy or experience helps children learn to make tradeoffs. This also helps build the ever-important, but commonly missing, “delayed gratification” muscle.
• Give Them Real Choices. If they want something beyond their budget, resist the urge to jump in and make up the difference. The lesson happens in the decision-making, not the bailout.
• Talk Out Loud as You Budget. Kids learn more from what you model than what you mandate. Let them hear why you choose to wait, why you prioritize certain expenses, and how you decide what “fits.” These little windows into your thinking shape their instincts more than you realize.

Why It Matters:

Budgeting teaches kids that money is limited, choices matter, and planning creates freedom. It’s the foundation for every healthy financial habit that follows. And when they experience that freedom early, the freedom of having a plan and sticking to it, they carry that confidence into every financial decision ahead.

Next month, we’ll dive into part 2: Investing.