Kids and Money: A Four-Quarter Budgeting Lesson

During a recent shopping trip my daughter asked for a $25.00 game that was not in the budget. I explained that we couldn't afford it this time, but that she could save her money and buy it in the future. Of course, this went over like a lead balloon. The only thing kids hate more than being told to save their money is to brush their teeth! The next day I decided it was time for a life lesson.

Savings and Taxes
After breakfast I gave my daughter four quarters. I told her that the four quarters represented Daddy's pay for the entire month (the scale is not that far off after Uncle Sam gets his share - sorry, that's a rant for another article). We could all afford to save more of our paychecks, so I told her a good rule of thumb is to try to save ten cents for every dollar you earn. She agreed this was a good idea. After running through a high-level explanation of taxes I asked for one of the quarters back because it had to go to our government for schools, roads, etc. She wasn't impressed. We also had to keep a little out for savings.

Housing
Next, I explained that it costs money to operate our home. The lights, the heat and air, the water, the telephones, the television, etc. all cost money. I asked her to give me another quarter to represent the money spent on our household. At this point half her quarters are gone and we haven't covered half of our household budget categories.

Cars
I started off this part of the conversation by reminding her of the last time she rode with me to fill up Mommy's car. She saw $35.00 on the pump and could not believe how much it cost to buy gasoline. I reminded her of this, and also told her a little bit about paying the bank who loaned us the money to buy the car, about the insurance we have to pay for in case we have a wreck, and the maintenance costs associated with oil changes, new tires, etc. I asked for one of her two remaining quarters back to represent the cost of owning and operating our car.

Everything Else
As my daughter sat staring at her lone quarter, I could see the message starting to sink in. Now, with that last quarter you have to buy food, clothes, diapers for your brother, dog food, medicine, and anything else that comes up during the month that requires money. This could be movie tickets, dinners out, books, CDs, etc. All those things have to be spent using that last quarter. There is no more money available, and you can't get any more unless you do more work.

We wrapped up the conversation. I gave her a hug and thanked her for listening to me. I told her I would pay her a $1.00 for that lesson and gave her the four quarters back. She said she would save it so she could buy that game she saw at the store. Bless her heart...she didn't realize she only needed 96 more quarters!