Ways to help your teen learn basic budgeting

Teaching your teens about money early on will give them an edge up in their adult life when it comes to financial success. It is important that teenagers recognize the value of money and understand that it is not an unlimited resource. From helping teens learn the importance of saving their chore money to explaining how credit cards work as well as teaching money management, you will help create smart financial habits that will last a lifetime. Start empowering your teens to be financially independent today.

While most teens today begin their first job at age 16, many teens and tweens earn/receive money from their parents in the form of an allowance, birthday money or to purchase the things they want and need. As they grow up, it is imperative that they learn to understand the value of a dollar and how to responsibly handle it. Below are a few tips that you can begin teaching your teens about finances.

Saving Money:

Whether the teen(s) in your life start saving $5 a week or $25 a week, getting them into the habit of stashing away a small portion of their earnings helps them to not only develop a habit of saving but also learn that saving money is imperative to setting short term and long term goals. Show your teen that money is not disposable and you have to work hard to purchase big ticket items, pay bills such as a cell phone, purchase concert tickets or go on a shopping spree.

Creating a Basic Budget:

Learning to create and stick to a simple budget in your teen’s formative years will make budgeting as an adult easier once they begin to take on more financial responsibilities. Encourage and help your teen(s) to create a budget based on how much money they earn from their job, allowance, mowing the lawn, etc. Have them track where their money is going; below is a quick and easy guide you can follow to help your teen(s) budget.

1. Determine how much money your teen is bringing in a week, biweekly or monthly.
2. Calculate their necessary expenses. This can be school lunch, cell phone bill, gas, etc.
3. Plan to save. Whether they are bringing in $10 a week or $100 a week, have them begin saving a small portion of their income for future expenses or goals. As little as $5 adds up over time!
4. Subtract their expenses from their income! This will be their spending money that they can use for eating out, clothes and other things they may want.
5. Review your budget monthly or as often as their income or allowance changes. Their budget should shift and change as their lifestyle changes and grows. Decide ahead of time what will happen if the money runs out sooner. Make sure your teen has the same understanding and stick by your decision.