Kids Budget Game Only Four Quarters

Not long ago on a shopping trip with my daughter she said something very profound. After telling me 17 reasons why I should buy a new Disney DVD for her I stood my ground and told her we could not afford it this trip. She wasn’t giving up that easy, and continued to remind me that I had just been to the bank and “ought to have money from my work.”

That’s when it hit me – it was time for the talk. No, not that talk! It was time for the budget talk, the kids budget game, you know the “money doesn’t grow on trees” talk. This is the first of a series of [tag]money[/tag] talks you need to have with your kids to help them grow up to be millionaires.

When we got home I gathered up four quarters and gave them to my daughter. I told her that the four quarters represented Daddy’s paycheck, and I explained that she had to give me quarters to pay for ALL the expenses we had during the month.

  • 1st Quarter – Taxes. Before we could spend anything I asked for one quarter and explained that the government collected this one right out of Daddy’s paycheck for taxes. The inevitable question, “What are taxes?” came next. Taxes are money that the government collects on income to pay for schools, roads, libraries and other important things that help people (I decided to keep it light, and not mention the hundreds of millions of dollars in wasteful government spending).
  • 2nd Quarter – Housing. I gently plucked the second quarter from her palm as she frowned. With the second quarter we pay for our house, our power for lights and heat, cable, internet and telephone bills, and any other monthly expenses. At this point she looked down and half her money was gone. She wasn’t impressed with this exercise, but I could tell it was starting to sink in.
  • 3rd Quarter – Transportation. I took her next-to-last quarter and told her this paid for Mommy’s car, car insurance to help in case we have an accident, gas and regular maintenance like oil changes and new tires. She was ready to pocket that last quarter and was growing impatient. However, the most important part of this exercise was coming up next.
  • 4th Quarter – Savings, Spending, and Giving. This was our last quarter, and with this money we had to fit all our remaining goals into a [tag]budget[/tag]. First, we wanted to save some money for our future. Then we needed to give some of it away. *This is a good place to talk about the importance of giving. Giving doesn’t always have to be in monetary form. My daughter has attended a wonderful workshop called Project Linus where people get together and knit blankets for children who have experienced some form of hardship (death in the family, accident, etc.). This is an excellent opportunity for her to donate both her time, and her money, to a very worthy cause.

After saving and giving away a portion of that last quarter, we also need to budget for our spending. This last bit of money has to pay for our food, entertainment, cleaning supplies, paper products, and gifts for the entire month. The more we spend on gifts and entertainment, the less we have for food.

After wrapping up the lesson with this last quarter I could see a light bulb go off. By giving my daughter something tangible to represent our income she was able to understand that there are things you have to pay for (food, shelter, transportation), and things you can choose to spend money on (gifts and entertainment). All categories must be paid for with a finite supply of money. By reducing the discretionary categories we have more money to spend on those we value more (saving, giving, our home, etc.).

Since that conversation she has asked me a few follow up questions regarding taxes. I try to answer them the best way I know how, but I have to confess I’ve been paying them for 15 years and I still don’t fully understand them myself! Oh, don’t forget to give her the quarters back, cheapskate.


  1. Love it! I have a 6 year old and I’m trying to get across this very concept. The “Just put it on the card mommy!” gets old.

  2. Can I ask how old your daughter is? I think this is a great way to teach your child about spending your money wisely. Thanks for sharing!

  3. Great illustration. There are three vital things that children are rarely taught and usually have to figure out on their own: 1)Personal finance, 2)How to get along with and understand your spouse, and 3) How to be a good employee or entrepreneur. If we could get those three things in those little minds, we could turn the world around.

    It appears that you’re doing your part!

  4. What a great idea! I am storing away this one in my memory bank for future reference – visual, concrete examples work really well for kids, and this one reinforces important concepts I wish I had been taught early on.

  5. Heather: That is an important part to the story, and I intended to include her age somewhere in there! She is eight years old, but this conversation took place as an “older” seven year old.

  6. My kids (8 and 12) receive an allowance of $2.50/week. This money, along with gift money they receive, is kept in a account, and is used for all discretionary spending – if we are out, and they want something (food, drink, toy, etc.) they can use their $. I always remind them that they should think about if they really want the item, and that they can get the food etc. for free at home. If they still want the item, and have the $ to pay for it, they can get it.

    The 12 year old has learned this well – saving up over $200 and rarely spending. The 8 year old is still learning. Overall, this has worked great – I wish my parents had done the same with me.

  7. Excellent technique. My now 4 year old is starting to get the concept. We have good times and bad times as far as discretionary spending goes, and she’s leaned that when it’slean, there’s nothing Mummy can do, but when times are good we’ll talk about it (ie sacrifice something so she can have what she wants. If she wants a donut, we can’t get *insert something she likes here* in the grocery shopping). Also since using cash it’s much easier to show her when we’re out of money (and that the wall doesn’t have an infinite supply – Mummy has to go and work for it, which she doesn’t like).

  8. Kin: That’s an excellent point you made about teaching kids that there are limits to what we can buy when times are tough, and choices to be made when times are good.

    I have to admit I enjoy splurging on my kids a little when times are good. One of my favorite movies is The Pursuit of Happyness. In one scene the father and son visit a convenience store to cash a paycheck – the first the father had seem in some time. His son has an eye on a candy bar, a totally frivolous purchase given their situation. However, the dad buys him the candy bar and makes his day. It was a subtle, but moving point. Even in tough times parents want to do something special for their children.

  9. This is a great idea. I especially like the visual aspect, and also how it captures all of the important basics – non-negotiable deductions like taxes, necessities like shelter and clothing, giving, etc.

  10. This is a great idea! Thanks for posting this! I am always looking for ways to teach our kids about money and the value of each penny we spend!

    Take Care


  11. Excellent idea! I don’t have children yet, but I have put some thought into how I would like to teach them about money. I know how important it is, and I want them to grow up with a strong financial education!

  12. I just read somewhere about using Monopoly money to show your older children exactly how you spend your paycheck- on house payment, utilities, gas, food, saving for non-monthly expenses like car insurance premiums, family fun spending, saving, etc. I am going to do this with my older boys (10 and 9) next paycheck. Seems like a great way to illustrate that, yes, it is a “large amount” of money (to them- if they only knew!!!), but also where it goes and why.

  13. Great explanation! Although I don’t have kids right now, I always wonder how I am going to explain the value of money when it comes time.

  14. By the time the Marine!Goth was 15 or so, he was included in at least some of the weekly ‘family finanace’ meetings. W and I wanted him to understand and get some of the real world skills – like how to balance a checkbook.

    The Corps has several personal and family finance classes in boot camp and after, too. I think that’s a great idea.

  15. All the time my children were growing up the’r father only got paid four times a year – requiring some good budgeting on our part! Our budget setting meetings were important occasions, on which the children had the choice of being quiet and letting us get on or actually observing and taking part. They each had their own allowance, which when they very young I administered for them, but gradually they made more and more of the decisions about spending that themselves until in their teens they were completely responsible. The main thing I think they absorbed was the crucial one – the pot is finite, when it’s finished there’s no more till the next pay day, so prioritising (and often waiting for things) is essential. I can honestly say they never begged us for extra money or things, because they knew fine well every penny was accounted for.
    Now, as young adults on very limited budgets they nevertheless manage extrememly well. I thoroughly recommend involving your children in the family finances to whatever degree interests them.

  16. My parents had a somewhat unique way to give us our allowance as children. We got 5 dollars per week and we had to split it up this way:

    $1 we could spend any way we wanted
    $1.50 had to go to our college savings account
    $1.50 had to be placed in a long term savings container (this is the fund which we purchased bigger items from like my bike (with birthday money included) or a video game)
    $0.50 presents (so we always had money to spend on gifts when necissary)
    $0.25 had to be donated to church
    and finally the kicker…
    $0.25 went to a FAMILY TAX (this money went to funding a family event that benifited everyone like a movie, or pizza night)

  17. I would teach that paying your tithe comes first, and then all the others areas fall into place. It’s important to teach our kids the difference between a tithe and an offering.

  18. That’s a great, simple way of explaining money management! It’s so important for parents to teach their children fiscal responsibility so they don’t end up as fiscally IRRESPONSIBLE adults. I urge everyone to get involved with the Junior Achievement program or help get it into their schools. It is a K-12, 5 week program that teaches money management, entrepreneurship and how economics work. In times like this, that change so quickly, this education is more vital than ever.