Teaching kids about money is tough. 

For better or worse, some kids are aware of money much earlier in life than others. A very real, very relevant issue these days is how money and wealth are portrayed on social media. The ultimate goal is acquiring the most money, driving the most expensive cars, wearing the most expensive clothes, and so on, all while exerting the least effort possible. When kids online are bragging about Tik Tok making them millionaires, while showing off belongings they were given for free by sponsors, it can be challenging to encourage your kids to consider finances in a rational, responsible way.

Our family values around financial management are to give generously first, save (and/or invest) wisely second, and spend responsibly last. We discuss these values more in depth here.

It may be different for you and your family, but it doesn’t matter if it’s an allowance, commission, birthday money, lemonade stand earnings, or change found under couch cushions; it’s how you talk to your children about money that matters.

Introducing the Kid Clothing Budget

We all spend money on our kids’ clothes. It’s an unavoidable (and often expensive) part of raising children. So why not turn it into a life lesson? 

We’ve told so many people about this strategy and always get really positive feedback, so we figured it was time to share it with you, too! 

P.S. Don’t miss the Kid Clothing Budget printable you can download for FREE! We made one for the older kids that you can grab here and one for the littles here.

The Inspiration

Back when we were broke newlyweds, budgets were our best friend. Responsible budgeting is the simplest yet most significant step we took toward financial freedom. While we gave up frivolous spending, we couldn’t completely give up clothing, so we took a hard look at where we were spending our money and how we could stretch our budget. Multi-packs, basics we could mix and match, and thrift stores started to hold a whole new value. This experience eventually became the inspiration for our kid clothing budgets.

The Beginning

Way back before our kids started earning money themselves, we talked about how to teach them about financial awareness. We got a little creative, thought about our own experiences learning about money management, and came up with the idea of a clothing budget for each kid. Since we were already spending the money on our kids clothes it made sense to let them play a part in deciding where that money went!

Because we pay close attention to where our money goes, by the time we introduced clothing budgets to our kids, we already knew what we were spending and stuck to that number. 

The Oversight

Of course, we don’t give the kids free rein, especially not at the younger ages; the actual spending of the clothing money requires some oversight.

For example, they wear uniforms to school, so the first thing we do when their budget renews is check on what they’ve grown out of or need to replace. Their school uniforms are “must haves.” After that, they consider what kind of sports and activities they’re doing and decide whether they’d benefit from special shoes or clothing. Finally, they know exactly what they have left and are welcome to spend that money on clothes and shoes of their choosing (within reason of course).

The Experience

It’s fascinating to observe how the clothing budget leads to different lessons for different kids at different ages. For example, our youngest used to crawl around on the turf at her preschool, dragging her knees behind her, which put holes in almost all of her pants. She eventually made the connection between the way she was playing and the worn out knees. Lo and behold, her pants started to last longer! 

These days, our house is overrun by pre-teens and teens drooling over the latest and greatest basketball shoes, often costing as much or more than their whole budget. By the way, these are the same kids who lose sweatshirts and constantly get holes in their socks (how?!), which turns into a tough lesson when clothing budgets renew. It seems like they’re caught off guard every time their budget disappears replacing the “must haves” they’ve lost or worn out. 

While it can be frustrating to them, it pays off when we see them take better care of their belongings and choose more carefully where they want to splurge.

More Budgeting Opportunities

A clothing budget has worked well for us because of the variety of considerations and opportunities for lessons, but this kind of budget can be replicated in other ways, too! Here are a few we came up with:

• Back to school budget (supplies, clothes, books, etc.)
• Vacation spending budget (souvenirs, snacks, etc.)
• “Fun” budget (toys, art supplies, special activities that cost a little extra like a trampoline park, etc.)

How do you talk about money with your kids?

Is a clothing budget something you see yourself trying out?

We want to know!