How To Teach Kids To Budget With Just Four Quarters

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One of the reasons it is difficult to teach kids about money is the fact they have none.

Sure, you may have started a college savings account for them when they were very young (if you were smart), or bought a couple stocks in their names in hope of future growth.

But other than a small weekly allowance the chances are your kids have no “real” money to speak of, much less money with which they can create a realistic budget.

The $1.00 (In Quarters) Budget Lesson

Sit your kids down without the backdrop of a television or a smart phone in hand.  This lesson works well outside over a picnic table.

Hand them four quarters and explain that those quarters represent everything mommy and daddy earn in a month.

Side note:  One of the reasons this lesson is so effective is because kids have something tangible; those four quarters in their hand, as opposed to an imaginary budget on paper.

This same budget lesson may be applied to grown-ups who have a problem spending with plastic (yes, I’m guilty, too).

Seeing those dollars disappear from your wallet creates transactional pain not felt from the swipe of a credit card.

Quarter One: Taxes

Now that your child has had a chance to hold all four quarters ask for one of them back.

This step is generally followed by a frown, but does provide a good opportunity for a high-level lesson on taxes.

ron swanson

Explain that roughly a quarter of your income is sent back to the government so they can use it to pay for our military, our police, parks and other positive things.

Now is not the time to go Ron Swanson and rail against the size of government and all its wasteful spending!

Quarter Two: Housing

When you ask for the second quarter back explain to your child that this 25% of your total income should be the most you can afford to pay for a house.

Hopefully, this number sinks in and in 20 years they won’t be buying a $349,000 house on a $60,000/year income just because some lender says they “qualify.”

This lesson can also inspire some gratitude.  Our home keeps us warm and dry and is always a safe place for our family.

We take care of our house and the things in it, because we work hard for them and we are proud of our home.

Quarter Three: Saving

While the Simple Man Savings Plan might be a little advanced for those not yet old enough to drive, the basic concepts are true at any age.

We save money for:

  • Emergencies
  • Things we want to buy
  • To pay for big expenses once a year
  • To live on when we get older and cannot work

Quarter Four: Everything Else

With this last quarter we have to buy groceries, gas, insurance in case we get sick or have an accident, pay for movies and books and new toys and games.

When I told my kids this lesson they said, “Dad, that is a lot to pay for with just one quarter of your paycheck.  Is that really what we do every month?”

Yes, it is.  I think on some level my children had a greater appreciation for the tightrope walk my wife and I must walk each month to stay on budget.


Now ask your child to come up with a “pretend” budget if they had to pay for everything they spend money on every week or month.

This could include school lunches, clothes, games, toys, iTunes music, etc.

You can then reverse engineer the Four Quarter Budget Lesson by asking them how much money they would have to earn to pay for these items (bonus points for factoring in taxes and coming up with actual work hours to generate enough after-tax income).

Simple Man Money