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Money management is a life skill that everyone needs. Teaching our teens the basics of a budget sets them up for success for when they go out on their own. Here are some tips to teach your teenagers about budgeting.
How To Teach Your Teenagers about Budgeting!
Grow up and becoming a teen can be difficult. The pressures to succeed and anxiety that surround them during this time can be immense. Schools set up the groundwork for academic achievement. They teach briefly about money, but not in-depth. This is where your parenting comes into play.
Teaching Teens about budgets and money can seem like a tricky task, but there are ways to make it easier. Even if they have not grown up learning about money and budgets, it is never too late to educate them.
Money management for teens is probably the most important life skill you can teach your kids before they are sent out into the world. Give them the opportunity for financial success.
Have them create a List
This is the fun part of teaching teenagers about budgeting. It is always fun writing down the things that you want.
But you have to show them realistically that their money needs to go to pay bills, school supplies, food, entertainment, etc. You can give them a glimpse into what real adulting is like. This list should consist of everything they consume regularly. You can break it down to the items that you will be covering until they must cover when they are living on their own.
Finally, have them add up all the items on the list and subtract it from their available resources. This will give them an idea of how much they have leftover to spend on the stuff they want or better yet, save!
Budgeting is Important
If you have older teens that can start earning their own income, have them start paying for ‘extras’. As parents, we have to cover the basics, such as clothes, food and school needs. Anything that is not deemed a necessity should be covered with your teen’s money.
If you budget $50 for jeans and they want the $100 pair, tell them they can make up the difference. Allowing your teen to take more responsibility for the spending will quickly teach them to think more before spending.
Show them how they can easily create their own budget.
Involve them in your monthly (or weekly) bill paying process. Open up about how budgeting works. Explain how you set aside money for different utilities each month. Teach them about wants versus needs.
Don’t spend money if you don’t have.
An example of this: Teens love their pizza. If they don’t have enough money to go out for pizza, then they don’t go out for pizza. Simple.
Kids expect parents to be able to pick up the slack on many items they may want. But you really have to buckle down and teach them that buying pizza at this point in time is not important. Making dinner at home is cheaper. Have them set aside money each month for pizza.
Let Them Open Up Their Own Account
As kids get older and become teenagers, make sure they get their own savings account. While interest rates are low nowadays, teens can still learn a little about investments and earnings on savings. Even if you started a saving account when they were little, let your children go to the bank with you and make their own deposits. Being comfortable with money and how to manage it can definitely be something your teenagers will use all of their lives.
Making sure that you are working side by side with your teen. This leads to my next tip.
Teaching Delayed Gratification
Along with savings, teaching delayed gratification is the key to their budget and money success. The older kids get the harder this is. If your teen wants a car, for example, make sure to help them learn how to earmark some of their money/savings for this goal.
Maybe they want to go to a special event or camp. Let them know how much you can pay and then have them save or earn the balance.
I started early by teaching my elementary age kids this tip. It is so hard for them.
Simply put, if they want something fun, they are going to have to save up to earn that opportunity. Don’t give in and give them the extra few bucks, unless they have worked for it.
Control of Money
The key is to teach them that they are the masters of their own money. Even on the smallest of incomes, they can control their own money. They never go into debt and never wonder how to pay the bills. Show them how to allocate their money (again, all back to basic budgeting skills).
If your teenager learns to save for what they desire and not to spend rashly, they will grow into adulthood with an advantage over others. They will be money smart and be less likely to fall into debt. Your teen might complain during this money education, but someday they will be thankful that you took the time to teach them how to budget and save.