As a parent, it’s your job to prepare your kids for life. And money management is just one of many essential life skills. Thus, the sooner you teach your teen to budget, the better. If you’re not sure how to do this, continue reading as we’ve prepared some advice for you. Trust us – it’s much simpler than you think.
Ways to Teach Your Teen to Budget
Even though schools set up the groundwork for your kids’ academic achievement, they only briefly talk about financial responsibility and the value of money. Therefore, you’ll need to step in and teach your teen to budget. This way, you’ll give them a fair opportunity for financial success in the future.
Teaching teens about money and budgeting can seem quite tricky and challenging. However, there are ways to make it easier, and we’ll reveal them further in this article.
Start with the Basics of Budgeting
To most people, hearing the word “budget” is the same as hearing “no.” As it’s often associated strictly with boundaries, it’s not a surprise most teens get discouraged at the very mention of this word. So, to prevent this from happening to you, start with the very basics of budgeting.
Explain that a budget is a guide, why budgeting matters, and what a successful and sustainable budget should be. You should explain that budgeting is not aimed towards limiting them—quite the opposite; when done correctly, a budget can help them achieve many goals.
Once your kids are familiar with the basics, they should understand that having a budget will help them avoid debt or spend more money than they have. They should also have a rough idea of budgeting the monthly expenses. Thus, you might want to consider talking to them about:
- Why is saving money important?
- What is the difference between fixed expenses and variable ones?
- What is expected, and what are the actual expenses?
- How can budgeting help them handle unexpected expenses and events?
Create a Budget with Them
Once your teen understands what a budget is and how it works, it’s time to put their theoretical knowledge to practice. So your next budgeting class with your teen should be reserved for creating a budget they can use in the real world.
The simplest way to get your teen started is to explain the 50/20/30 rule:
- 50% of their budget should be spent on essentials.
- 20% should go towards savings.
- 30% is reserved for fun and discretionary expenses.
Teach Them the Difference Between Wants and Needs
Keep in mind that expenses your teen finds essential are usually all but. So to teach them responsibility, you need to teach them how to separate essential costs from non-essential ones.
An excellent way to teach them this is to let them be responsible for their own clothing expenses. Rather than just taking them shopping, give them a certain amount of money for their clothing budget and let them decide how to spend it.
if they’re old enough, you can consider charging them a nominal “rent.” This way, they’ll understand that most things and services they can’t live without are actually just taking money out of their pockets.
However, there is a big chance your teen won’t understand your reasoning behind this type of decision. Thus, it’s paramount to talk it over in detail, answer as many questions they have, and ensure they understand that what you’re doing is for their best.
Give Your Teen the Necessary Tools
Nowadays, most parents have a hard time keeping their teens off their smartphones. If you are one of them, we completely understand your “pain.” However, when teaching your teen to budget, you can use technology to your advantage. Imagine how much more exciting finances will become when you add their smartphone to the equation?
For instance, plenty of great budgeting apps can help your teen learn to save instead of spend. Or, you can show them how to create a spreadsheet and teach them another helpful skill. These tools can be pretty beneficial for keeping your teen connected with their money.
Even when your teen gets the hang of budgeting, make sure to keep the money discussion going. It’s a good idea to schedule monthly family meetings. You can analyze their budget and help them make adjustments if needed.
Always have in mind that it’s never too late to help your kids learn money management skills. Even if your teen is about to move to another city as a college student, there is still an opportunity for them to learn. For instance, you can help them minimize costs when moving long-distance and give them an example by showing them how you manage to stick to your budget.
What if your teen breaks their budget?
Let’s be honest – it’s highly unlikely your teenager won’t mess up their budget at least once. After all, it has probably happened to you, so it would be unfair to expect perfection from your teen.
Look at it from another perspective, as this will help them learn and know what mistakes to avoid the next time. Besides, it’s always better to let them make budgeting mistakes while they’re still at home. That way, you’ll be there to help them correct the error and ensure next month’s budget is spent in a better way.
Teach Your Teen to Budget!
As you can see, by taking your time and teaching your kids the importance of budgeting, you’ll help them strengthen their money management skills and give them an opportunity for financial success. Even though they might be hesitant or rebellious now, they’ll surely appreciate it once they’re older, independent, and financially stable. So, wait no more – start preparing for your first lesson and teach your teen to budget.
You might also like:
- A Beginner’s Guide to Managing Your Money
- Happy Home: How to Balance Your Budget During Trying Times
- 4 Ways to Cut Unnecessary Costs
- Guide to Creating an Annual Family Budget Plan
- How to Manage Money as a Couple
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