How to Teach Your Teen to Budget

Teaching Teenagers To Budget - Teenager with empty pocketsFor some reason, there is some stigma attached to the word budgeting. Just hearing it can make us cringe, have nightmares of a life without fun, or simply want to lie down and give up all hope of being happy ever again. The truth, though, is that budgeting doesn’t have to be so bad. In fact, budgeting can make you happier and more satisfied with your life and your choices in the long run - and it’s a great skill to go ahead and start teaching your children as soon as they get their first job.

We all know that teaching a teenager to do anything can be quite a challenge, let alone something that sounds as dull and horrifying as budgeting, but we’ve got some great tips on how to get your teen to manage their money without either one of you losing your mind throughout the process.

1. Have your teenager record every expense for a month or so

Most teenagers these days spend more time blogging, surfing the web on their cell, or generally being on their computers than they do being out in the real world - or heaven forbid - writing with actual pen and paper. So, reach out to them in a way they understand and appreciate. Don’t make them keep a literal journal of their expenses. Have them start a blog of it, or make an easy-to-use spreadsheet on their computer.

If they write down their expenses, they can see what they spend the most money on, what payments might happen consistently (i.e. petrol for their car, bus fare, phone bill, etc.), and they’ll be able to see it all laid out for them right there.

2. Have them estimate their income

Do they have a job where they get paid every week? Every two weeks? Do they still get an allowance? Does their job allow them to get tips? Your teenager needs to figure out what, exactly, they’re going to make, how often they will make it, and see what their total income for a specific period of time will be. It is probably going to be easier to do this monthly. That gives them a definite beginning and ending point, and translates easily for the rest of the year.

3. Help them calculate their total income minus their total expenses for the month

Once they have listed their expected expenses and anticipated income, have them add it all up, then subtract their expenses from their income to see what they will have at the end of it all.

4. Edit the budget as needed

Does your teen not make enough money to cover all of their expected expenses? Or, on the flip side, do they make far more money than they spend? Either way, some decisions are going to have to be made. If your teen doesn’t make enough money, they will either have to cut their spending or increase their income to make up the difference. Of course, being a teenager and working two jobs isn’t ideal, but everyone is different!

If, however, your teen has an excess of money after all their expenses are accounted for, it’s time the two of you looked into ways to save it or places to put it for the betterment of their future. Savings accounts are great ideas, because their money accrues interest. This way, they can either save for college, a car, or some other large purchase they have their eye on.

5. Accommodate for the unexpected extras

A mistake a lot of teenagers make when it comes to money is simply underestimating how much they will spend. Maybe they grab a fizzy drink or candy bar every time they fill up their car. Maybe they simply miscalculate the number of times they eat out with their friends. It can add up quickly. The best way to avoid misjudging a balance is to leave extra wiggle room.

Have your teen go ahead and plan to spend a little more than they think they will. Maybe they use it, maybe they don’t - but if they don’t, they can always add that tiny bit of extra into their savings!

6. Don’t give your teen a credit/debit card, or at least explain to them when to use them

Sure, cards are great for buying things online, but they are also a danger. Teens, especially, tend to have the “out of sight, out of mind” mindset that keeps them from thinking about things that aren’t right in front of them. A debit or credit card can be a nightmare because of that. With their money tucked away in a balance they aren’t seeing, teens will be more likely to spend more money than they should.

Cash is always the best way to keep a visualization of how their money is disappearing right before their eyes. They will literally see it making their purses smaller and smaller, and - hopefully - be less inclined to spend it.

7. Help your teen make a list of what they want/need

If they have a visualization of the things, and prices, they have to have or maybe just want really badly, they will probably be less likely to buy the unnecessary/unimportant things that so often catch their eyes.

8. Show your teen the best ways to look for sales

Whether they shop online or in stores, your teen may need a few pointers on how to spot the best deals at the best times…  Obviously pointing them in the direction of our community and the latest deals page is a good start!  Remind them that seasonal items are always on sale at the end of the season. Maybe they really want that swimsuit, but it will be on sale at the end of summer, and then they can wear it next year instead!

9. Avoid sending them to the shops just because they have nothing else to do

Most of the time, a trip to a shop “just to look” or “because you’re bored” ends up with you spending money you hadn’t planned on spending. The same holds true for teens!

10. Most importantly, try to instill the sense of being happy with what they have

This is hard, of course, because teens typically want the hottest, newest item and they want it right now - but if they are more content with the things they already have, budgeting is going to be a whole lot easier.  Good luck with your persuasion skills on this one!

Verdict?

MoneySavingPigDo you agree that we should be pushing our teenagers to take responsibility of their finances - or should they just be left to learn the hard way and enjoy their younger years? Or do you have your own proven techniques to engage a teenager?  Let us know using the comment section below!

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