Teaching Kids Budgeting Basics with Lemonade Stand Profits

Understanding Income 

Income is the money earned from selling lemonade and other items at the stand. 

Activity: Explain to your child that the money customers pay for lemonade is their income. Help them count the total amount earned at the end of each day. 

TIP: Use a simple income log to track daily earnings. This can be a notebook or a digital spreadsheet where they record each sale. 

Calculating Expenses 

Expenses are the costs associated with running the lemonade stand, such as ingredients, cups, and decorations. 

Activity: Sit down with your child and list all the expenses. Include costs for lemons, sugar, water, cups, napkins, and any other supplies. 

TIP: Create an expense sheet to help them keep track of their spending. Encourage them to keep receipts and note down each purchase. 

Determining Profit

Definition: Profit is the money left after all expenses have been subtracted from the income. 

Activity: Help your child subtract their total expenses from their total income to determine their profit. This teaches them the importance of covering costs and highlights how much they actually earned. 

TIP: Use this formula: Profit = Income – Expenses. Make it a fun activity by using colored markers or stickers to show the calculation. 

The Importance of Saving

Saving is setting aside a portion of the profit for future use. 

Activity: Encourage your child to set a savings goal, such as buying a new toy or contributing to their college fund. Decide together what percentage of their profit they should save. 

TIP: Open a savings account specifically for their lemonade stand earnings. This not only keeps their savings safe but also helps them see their money grow over time through interest. 

Creating a Simple Budget

A budget is a plan for how to spend and save money. 

Activity: Work with your child to create a simple budget for their lemonade stand. Include expected income, estimated expenses, and planned savings. 

TIP: Break down the budget into categories, such as supplies, marketing (like signs and flyers), and savings. This helps them understand where their money goes and ensures they have enough to cover all costs. 

Reinforcing the Lessons

Practice Makes Perfect: Regularly review the budget and financial records with your child. This reinforces the lessons and helps them adjust their budget as needed. 

Celebrate Milestones: Celebrate when your child reaches a savings goal or successfully covers their expenses. Positive reinforcement makes the learning process enjoyable and rewarding.