All About The Benjamins: Budgeting & Math

All About The Benjamins: Budgeting & Math

At the start of a new year, it's tradition to set goals and resolutions we want to achieve, and that often includes financial goals. Whether your kids are big or small, it's never too early to teach them how math can help form good money habits. One way to practice math skills and learn about money and the value of a dollar is to create a budget.  Let's go over the basics of budgeting, how it teaches certain math skills, and end with some fun budgeting activities. 

Budgeting Basics

A budget is a tool that assigns a purpose to each dollar by keeping track of the money we earn, our income, and the money we spend, our expenses. For kids, income can be counted as money earned from a weekly allowance for completing daily chores, or from a part-time job. The money spent on pizza every Friday or the $10 you pay for a monthly game subscription is an expense.

Creating a budget is as simple as listing out and adding all sources of income and all expenses separately, then subtracting the two amounts. If expenses are greater than income, there is a deficit. If income equals more than the expenses, you have an overage. Every dollar spent or saved is attached to a decision. With a budget, we make a plan for our money before it leaves our hands. It's a roadmap for our money!

Budgeting In Action

The task of budgeting can be used to teach various math concepts, such as,

• Counting
• Numerical Values
• Reasoning
• Calculating Risk 

Your child can try some real-world budgeting and practice these concepts with the following activities:

●      Practice with a Piggy Bank

Most of us remember having a piggy bank as a child, happily collecting any spare change we could find. You can start this tradition with young children to help them with counting and understanding place values. Guide them through counting out small value coins and bills to start as they drop them in their piggy bank, working way up to higher value currency as they become comfortable. Using the action of putting money into a piggy bank is also a great way to model the importance of prioritizing saving money.

●      Make a "Wish List" Budget

If your child has a growing wish list of “wants” they ask for frequently, have them select one realistic item and investigate the cost. For example, if your child has been asking for a pet, give them the task of researching the cost of pet ownership.  How much for food and visits to the veterinarian? Do they want their dog to have accessories and toys? After their research, ask them to present their findings and use this information to come up with a budget for their request, outlining anticipated expenses and potential income sources.

●      Open a Savings Account

For older children who may have outgrown their piggy bank, you can encourage them to open a savings account at a local brick and mortar bank or assist them with opening an online-only account. Help them in researching the standard interest rates and calculating how their money can grow, thanks to compound interest. For example, if they start with an opening deposit of $100 and the annual percentage yield is 0.40%, how much interest will they have earned in 1 year or 2 years? What would be their new total account balance?

●      Create an Envelope System

This last activity is great for kids of all ages.  Practicing budgeting using the envelope system is a hands-on way to showcase reasoning. Starting with an income amount,  for example, $50.00, label each envelope with their favorite activity or interest and the dollar amount they want to allocate to the activity. For example, your child could choose to label an envelope "Movies" to save $15.00 for a movie ticket for an upcoming movie. Another envelope could be labeled "Birthday" with a $25 savings fund to start saving for a birthday party. They can have as many envelopes as they want, but they only have $50.00 to spend between the envelopes. At the end of the activity, have your child calculate how much the amount in the envelopes may have increased or decreased, based on what they put in or took away. The envelope system will help your child see in real-time how they have control over how much stays in the envelope and that money truly doesn't grow on trees!

At Mathnasium, we help your child visualize how their math skills are used every day in the real world.  We offer specialized one-on-one instruction in our center and online for students in grades 2 through 12 by qualified instructors. Give us a call or reach out to us online to get started today and schedule your child's free no-risk assessment.

Wishing you a great start to the new year!