It’s only natural that we YNABers want to teach our kids about budgeting. But how do we do it? How early do we start? What if we do it wrong? This is so stressful!
Well, happily, we have no shortage of advice on this topic. Jesse even wrote a whole chapter in the YNAB book about how to teach your kids about money! And, yes, we should definitely make a plan to get our kids started on the right financial footing.
But, even if you feel like you haven’t done anything to teach your kids about money—I do have some good news. Kids learn by watching us. They follow our actions even more than our words. And this starts early. If you’re a diligent budgeter yourself, you might be surprised how much they’ve already absorbed.
My Son Teddy
My son Teddy is a very fun, cuddly, wild three-year-old boy. In fact, just after I finished that sentence, he came into my office to announce with great excitement that he just found the coolest rock outside. Very exciting!
Anyway, about six months ago—when he was only a very fun, cuddly, manic, two-year-old boy—he showed me just how closely he’s watching. Now, keep in mind, since he was only two years old, I’d had exactly zero conversations with him about budgeting. Never once had I talked to him about the importance of embracing scarcity. I’d never given him a lecture at bed time about True Expenses or Roth IRAs.
He’s just a kid. He has fun, he learns his animal sounds, he sings about the days of the week, he fumbles through his ABC’s. So I was shocked to find that he understood budgeting without the benefit of any academic instruction.
The Day Teddy Started Budgeting
It was a lovely spring day in central Virginia, and he and his sister had spent the better part of the afternoon looking for earthworms. (By the way, they have no qualms about holding the worms or pouring a handful in my lap.)
After such an incident, Teddy looked at me seriously and said, “Daddy, me wan go to store n get bwue CREAM!”
Translation: he wants blueberry ice cream at the shop down the street. It’s very good, but pretty expensive for a family of five. It was the very end of the month, and I knew we didn’t have enough money in the budget for such a purchase. I hated to disappoint him (gosh, I always do), but I had to say no.
So I did what all parents do when they must deny their children something fun. I appealed to an outside authority, hoping he wouldn’t get mad at me.
“Hmm,” I said, “Well we have to see if we have enough money for ice cream, bubby. Here, touch right here.”
Teddy then opened the YNAB app, very excited to have the great privilege of interacting with his dad’s much-coveted phone.
“See!” Teddy exclaimed, “We have one money!”
“Wellll, we only have $4.77 in Entertainment. We don’t have enough to go to the ice cream shop right now.”
I braced myself for a classic toddler tantrum … but that never came.
“Den, we wan go!” was his reply. Then he smiled and went happily back to his earthworms.
I was shocked. Not only did he totally accept that we weren’t going to get ice cream that day, but he just demonstrated a basic understanding of budgeting. He has never used money before, but he understood scarcity.
Teddy Learned Budgeting Without Me Saying a Word
I’ve been thinking about that story ever since. In that moment, it struck me how much he had learned. Maybe he’s heard conversations between me and his mom, or he’s seen me consulting my phone to make decisions about buying something. Or, maybe he’s just a genius and he’s destined to run the country! I don’t know. But I do know my son learned budgeting without me saying a word.
Now, obviously, there’s a lot more to teach him. Ever since then, I’ve been looking for opportunities to demonstrate budgeting to my kids. I’ve shown them the budget when we do have enough money for something. I’ve shown them that we don’t have enough for something, and talked about moving money from another category. I led my kids through a six-week investing course about the importance of low-cost index funds. Alright, I made that last one up. But you get the picture.
Kids are smarter than we think. I’ve seen that over and over again. They understand scarcity (how often does the reality of limited resources come up on the playground?). They understand that you can’t have everything you want immediately. Sure, they might not like it, but they understand it.
But the most important thing I’ve learned from my short time as a father is that my kids are watching me closely. And they’re insatiably curious. So we should show them how to budget and let them in on our budgeting life. It will pay dividends in the long run!