Teaching Teenagers About Budgeting: It Pays To Start Early
June 24, 2007
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Now that your teenager has a job, it’s time to talk about money. Their first inkling is to spend, spend, and spend some more. Teaching your teen about setting up a monthly budget will help them save some money for a rainy day.
Budgeting is important for every one who has an income and expenses. The purpose of a budget is to make sure that all of the bills are paid, some money is saved, and some money is left for personal spending. Without a budget, money problems can result.
Teenagers need to know the basics skills needed to handle their money. The teen years are the perfect time to begin practicing money management skills because they will soon be out on their own. The financial decisions that had been made by parents will become their responsibility.
Teach your teen how to calculate net income. Calculate the amount of money they will bring home after taxes every two weeks. Most employers pay on a bi-monthly schedule. If they will be paid once a month or every week, you can adjust your budget accordingly.
Give your teenager a few items to begin their budget. When they start making money, make them responsible for their own phone bill. A regular bill that comes every month is a good place to start with their budget. This can be their cell phone if they have one or their own home phone service. If they go over, they will have to pay the extra or risk having their phone turned off.
Add clothing to their budget. They will need to decide how much they want to spend on school clothing and figure that into their budget. Clothing is expensive, so this gives teens a chance to learn about comparison shopping and making the most of store sales.
List all of the expenses that reoccur on a monthly basis. If they drive a car, this will include the price of gas. Add up these dollar amounts to find out your monthly expenditures. Subtract this amount from the total monthly income.
Decide what to do with what is left. Talk about short term and long term plans. If school has just ended, then buying school clothes is a long term investment. Going to the movies or other forms of entertainment are short term. A certain amount of money needs to be set aside for these activities each month.
Having money should bring about a change in your teen. Now that they are responsible for expenses, they need to view their money with more scrutiny. Teaching them how to handle money now, will help them to remain fiscally responsible into adulthood.
To learn more, check out the Mom’s Talk eBook’s Guide to Family Budgeting - Step-by-step guide to help you establish a workable budget.
Posted by admin | Filed Under Money & Finance, Parenting
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