In a large microwave-safe bowl, combine the peanut butter, chocolate chips, and butter. Microwave in bursts of 15 seconds, stirring in between each burst for 15 seconds, until the mixture is melted and smooth. Add in the vanilla and salt. Pour over the prepared cereal. Stir well until the cereal is evenly coated.
Pour half of the cereal mixture into a gallon-sized plastic bag and pour half of the powdered sugar over it. Seal and shake until the cereal is evenly coated. Repeat with the other half of the cereal and powdered sugar in the same or a different bag. Shake until all the cereal is well coated.
Pour coated mix into a large bowl and stir in spring-colored M&M's. Divide into individual snack size bags and attach a free printable bag topper!
Alternatively: store leftover Muddy Buddies in an airtight container at room temperature.