Introducing your middle and high school kids to the concept of budgeting can be a little more challenging than it is to introduce your young children to these important financial skills. It is however never too late to help your teen learn to budget.
When teaching your older children to budget your expectations and guidance should be presented in such a way that holds them more responsible for their financial decisions. The goal is to teach your older child that the choices they make with their money will affect them in either a positive (saving money for a larger goal) or negative (being broke isn’t fun) way.
Five Simple Steps To Help Your Teen Learn To Budget
Lead By Example. It is important to lead your children by example. If you are not reasonable with your own finances how can you expect your children to be? You must actively show them how to be good stewards of their money. For examples on how to do this you can read my post, How To Teach Young Children About Budgeting.
Allow Them To Get A Part-Time Job. Older children who have enough free time after school should be encouraged to take on a part-time job. By allowing your child to work you are teaching them some very important lessons. Money doesn’t just appear out of nowhere, you must work for it. Once they receive their first paycheck it will help motivate them to work, and with your guidance they will learn to have a positive work ethic. Now that they are earning their own paycheck you can guide them on how to manage their finance. Teach them the importance of saving, spending responsibly, and setting their own financial goals rather it be a car or a debt free college education.
Help Them Learn To Be Savers. With your help, your older child can open their own savings account. Giving them a safe place to save their hard earned income. But don’t stop there. Encourage your kids to save something out of every paycheck, teach them the importance of having funds set aside not only for an emergency but for a long term financial goal. I suggest following the 80/20 rule for your child’s account. If you are not familiar with it, the 80/20 rule simply states that you save 80 % of your earned income leaving you 20% to spend. With money in hand your child may be tempted to spend it all, but you must stand firm and insist they learn to save.
Help Them Create A Budget. As an adult our budget is the foundation of a successful financial life, without it we have no guidance with our money and it just seems to fly out the window. The same is true for your child, without a plan the little income they have will be gone in a flash. Instead of letting their money simply disappear set aside some time each week to help them create a budget. Take some time to explain why they need to set aside a specific amount for different necessities and why they need to have short and long term savings plans. You may even want to let them observe you creating your own family budget, and taking the time to explain why it is so important to practice smart money habits.
Set Limits. As I mentioned before, it is easy for the money your kids have earned to fly through their fingers. By setting limits on how much they can spend each week, as well as making them responsible for things like gas or entrance fees to high school sporting events you are providing them with teachable moments. They must choose what is most important to them and utilize the budget you helped them create to decide how they are going to spend their money. They will have missteps, make the wrong decisions and on occasion run out of money before the end of the week.
When setting your limits it is important to stick to them. Your child may ask you for more money but you shouldn’t jump to bail them out, especially if this is not the first time they have asked for help. Instead of handing them over your hard earned income, turn this into a teachable moment. Let them experience the consequences of their actions. When you don’t set a budget, and follow through then when your money runs out you are in financial trouble. If they learn this lesson while living at home, they will be less likely to make those mistakes when they are living on their own.
Teaching teens about budgeting can be difficult, which is why it is so important to begin these lessons at an early age. By giving them the opportunity to learn from their mistakes while living at home and under your guidance they will be able to grow into better informed adults.
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