Why We Let Our Teenager Manage Our Budget

Guest post from Hope

My husband and I have been using (and sticking to) a written budget for our entire married life (24 years!) We have experienced the peace that comes from living debt-free — including our home — for many years.

We recently decided it was time to make finances and budgeting “real” for our 16-year-old son. So, we put him in charge of our family finances! That’s right. He took it over “lock, stock, and barrel!” and I think it’s been an experience that he will never forget.

If you’d like to get your teens more involved and aware of real-life finances, here are a few tips that helped us.

Give Them Credit

I admit, this has a dual meaning. We homeschool. So, it was natural for us to offer our son high school credit for his foray into the world of finances. But, I also mean, that I think we need to give our children credit for being mature enough to learn real world, life-long lessons by taking an in-depth look at our family’s money.

I did feel a bit sad that, somehow, I had taken away some of my son’s innocence by letting him know just how hard it can be to “make it” on one income. I wanted to be sure that he retained his feeling of security. We don’t want our children to worry that “Mom and Dad won’t have enough money”.

However, to my surprise, the opposite has occurred. He has seen, even more than before, the depth of our praise at seeing God meet our needs in amazing ways.

For instance, the budget for household items is essentially depleted for the year. Then, this week Kohl’s sent a $10 off voucher in the mail, allowing us to purchase four pillows on sale (with an additional 20% off coupon) for just over $2 out of pocket — for all four pillows! I think James was as excited as we were!

Give Them Tools

We began this process by enrolling our son in a free, six-week Biblical money course, which we attended with him. This gave him a lot of Biblically-based knowledge about money principles in a logical and sequential manner.

If you can’t find a seminar near you, check out Crown.org. You’ll find a lot of wonderful budgeting advice there along with charts, articles, and interactive tools.

I showed our son that if he began saving just $300 a month, at 5% interest, he could purchase a $120,000 home for cash at the end of 15 years. Then, we used the tools to see what a mortgage would cost on the same home at 5 percent interest for 15 years.

Give Them the Reins

Let them do it! After that six-week class, I opened up our finance books to our son. He can’t sign the checks, but when a bill comes in, he can tell me how to fill in the check (or make the transaction on-line) and enter the amount in the proper part of the ledger.

He enters all of our expenses into the ledger, keeps track of each category, makes a spread sheet at the end of each month showing what we spent in each category and what we have averaged thus far this year. He also makes recommendations on what changes we need to make in each category – if any.

Give Them a Goal

Our son’s final goal is to look at this year’s totals in each category and set up the family budget for next year. So we set January 1st as an end date.

A sense of completion is important and the end of the year always seems like a time to take a deep breath and say “thank you” to God for helping us and blessing us. So, January 1st, he’ll get his 1/2 a credit in “Consumer Economics”.

Then, he will make up our “end-of-the-year” log which displays our net worth, savings this year, what percentage of our income went to each category, a list of our current short, medium, and long-term goals, and write next year’s budget!

When we began this project, I knew I wanted our son to take the finance course for at least six months so he could see seasonal fluctuations  I also was fairly confident that something unexpected would happen within that time frame — so he would get to see the emergency fund at work.

It did! He accidentally hit the garage door while I was teaching him to park in the driveway. :)

He is now so aware of how much money it takes to make it from one month to the next – and he is very proactive in helping us stay on target. He is also genuinely grateful any time we are able to give him something extra — not a needed item — but just something to bless him because he is our son and we love him.

He now knows first-hand where that money came from and how hard it is to stretch. Money has become a reality to him!

Hope is the stay-at-home, homeschooling mother of four wonderful boys and wife to Larry for 24 years. She resides in Central Illinois where she enjoys leading worship at church, teaching history for her homeschool co-op, writing in her spare time, and speaking for local groups.

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Comments

  1. says

    Great advice! Awesome to see parents teaching their children at a young age to be responsible with money.

    I think I need to find some solid saving info…where can you get 5% interest on savings? We want to do something with our savings (right now it’s just in a second checking account because we were burned by savings account fees. One month we were charged, like $6 b/c we had to withdraw from our savings, and our interest earned was like $.16!). Everything I have found has been less than 1% interest. I would love to know where to find 5% interest on savings. Thanks in advance for any help.

    • says

      But then when I entered $300/month at 5% interest for 15 years, I just got $80,000? I’m so bad at finance stuff! lol

      Any good advice/websites for finance stuff? I’ve got the budgeting thing under control, it’s just the saving/investing that I could use info and help with.

      • hope64 says

        Crystal,

        Hi! I answered you in the reply section for everyone. But, basically it was an example for him in the power of compounded interest. There is a calculator at http://www.crown.org that will let you plug various amounts in, change the interest rate, starting amount invested, and amount of time that the money is invested. I started his “house savings” account with $15,000, then added $334 monthly with daily compounded interest of 5 percent. At the end of 15 years, you get just over $120,000. Then we looked at a $100,000 loan on the same “property” with putting $20,000 down. The contrast was jaw-dropping for him. My objective was to give him an example of how you can break a “big,hairy goal” down into smaller increments, work hard over a period of time, and make it happen.

        Hope

    • Sarah says

      Crystal, one alternative to a savings account through your bank is http://www.smartypig.com. They offer 1% interest (not much, I know, but better than I can find elsewhere!) and allow you to create separate “goals” like paying off debt, saving for a vacation, etc. You transfer money directly to smartypig from your bank account, and I’ve found it to be very secure. You can’t take money out of a goal, but you can close a goal at any time and transfer it back into your bank account. The only catch is that it can take several days to process and get back into your account, so you just have to plan ahead. It’s designed for people wanting to save for long-term goals, and I’ve found it easy to use, secure, and helpful. Check out their website for more information. I’m not to savvy about savings either, but I hope this helps!

  2. says

    I absolutely love this idea! My kids are currently 2 and 4, so not something I’ll be doing anytime soon, but I definitely want to remember to do this 12 years or so down the line!

    • says

      My oldest is 8, but I’m going to remember this! When I was a teenager, my mom was taking care of her mom’s finances. She showed me the checkbook and ledger and all the bills. I wrote checks in, made sure bills were paid, etc. I learned a lot about finances w/o my parents having to let me in on their finances. :)

  3. hope64 says

    The “house scenerio” was just to show him the power of compounding interest, saving and having well defined goals. As I remember, for the example in savings, I figured him starting with $15,000 to begin his “house savings” account and compounding interest. I figured it at about $335 per month in this fashion.

    We paid for our first home mortgage off in 5 years. Then, we stayed in our little home for an additional 13 years, making payments to “ourselves”. Every time we saved up $5000, we put it in the longest term CD that we could. At that time, we could get about 4 percent interest on a 5 year bond. At the end of 13 years, we took that money (and the money we made from selling the first house) and paid cash for the second house. The only caveat is: We did have a small inheritance from my father-in-law. We invested that money, and did have some additional funds from the interest earned on that money to put with the money which we have saved.

    And, like you, we don’t get 5% interest on any of our investments now. I only wish we did!

    • JP says

      Thanks Hope. It’s sounds like you and your husband have been frugal and transparent about your finances for several years. Has this always been the case? Were there times that were more challenging? Did you have to go through a financial rude awakening?

      I’m just curious because I think many readers at Money Saving Mom may not start with the best financial tools and frugal habits.

      Thanks!

      • hope64 says

        JP,

        We got on the right financial track after just a few months of marriage. We spent all of our wedding gift money in about 3 months. Simultaneously, our local christian radio station began airing “Money Matters” with Larry Burkett. I came home and said, “We are going to make a budget, stick to it, and pay cash for our next car.” My husband thought I was crazy! We were both making $5 and hour at the time. We took out a very small loan for the next used car – paid for in 6 months. And after that, have paid cash for our cars.

        VERY interesting story is that our little apartment was too much for our budget. So, we began to pray for a small house, in a nice neighborhood, for less money than our rent. Believe me, this seemed a really impossible request. A few weeks later we were taking a walk and turned down a side street that we had never walked on before. There was the cutest, little, one bedroom house and it was for rent! The rent was $90 less than we were paying. We rented that 550 square foot house for 4 years while we saved like crazy for our first home.

        Hope

  4. says

    What a great idea, and such a wonderful way to give your son a real-life lesson in finances. As a single mom of 4 boys, who is on a very strict budget, I am filing this away for future use. My boys are a bit young (my oldest is 13), but I think it would greatly benefit each of them to have the opportunity for a hands-on lesson in economics like this.

    Thanks for sharing !

  5. says

    I think this is a really awesome way for kids to really grasp the concept of money. So that when they get out on their own they have no excuse how to use it. They were taught the real life concept. :)

  6. Meagan says

    How wonderful that you are giving such fantastic hands-on training to your son. I think my parents did a fairly good job teaching me about finances and saving money, but I really like your approach. This is a fantastic method that I will sock away for future use, as my kids are 3 and 2!

  7. Susan says

    What a wonderful blessing to give your son! When I was a teen, my parents gave me responsibility for the checkbook (writing checks for their signature, paying bills, balancing the account – this was in the 1970s, before there were home computers and software to help with the banking). They didn’t have a written budget (that I know of), but they did have no debt (except the mortgage). I learned a tremendous amount during that time about what things cost and the value of money. I also learned the mechanics of managing a checking account. When I went off to college, I discovered that all my new friends had brand-new checking accounts, and NOT ONE knew how to actually write a check, much less balance their account. Looking back, those lessons were probably the most valuable gift my parents ever gave me!

  8. says

    I think this is great. I have said for a long time that I think they should teach personal finance in high schools. It is such an essential part of life and something that truly needs to be learned. I honestly think I would have gotten more out of a personal finance class than I did my algebra class. Maybe that sounds like a stupid thing to say, but I really think it’s true.

    • Andrea says

      Not stupid at all! Algebra is important to some people, but financial knowledge/basic consumer math is important to almost everyone!

    • jessica says

      I don’t think your idea is stupid, but I do think that the real life functional application makes this so much more powerful and meaningful! My husband used to do a section of this in an economics class when he was a teacher. I think it was cool that he did it, but I think the experience this family provided is 10x more valuable.

      • JP says

        Lot’s of good comments here from Jocelyn, Andrea, Susan and Jessica.

        Personal finance education is needed desperately in our classrooms. I could not agree more.

        With that said there are other pieces to the problem. Financial education has been around for many people to access for decades (although mostly outside of the school system).

        There is an entire financial industry that is highly incented to convince you to save your money responsibly (Vanguard and Fidelity are two companies that come to mind).

        But for the most part they have failed. Their efforts at education have failed. 75% of Americans approaching retirement have $30,000 in savings for retirement (NYT). 401k participation rates for young professionals is no better than their parents.

        I’m making a larger macro point (which may not be that helpful) but I think we need to be careful when thinking that financial education will be the silver bullet. It hasn’t been.

        Not all families have passionately frugally minded leaders like yourselves ;)

  9. says

    This is so cool! We recently attended a seminar at our church for parents of middle schoolers (our oldest just began her first year of middle school). One topic they touched on was setting goals with our kids from now until the end of high school. They encouraged us to think “long term” as we talked with our kids about an array of topics. One topic they recommended we discuss was financial goals, budgeting, and planning. Neither my husband or I received much teaching (or modeling of healthy habits) in our growing-up homes, so it is very important to us that we give our children strong tools early on. We just sat down recently with our oldest and helped her map out a very simple budget for herself, complete with some short-term savings goals and long term savings goals. I am going to keep this idea in the back of my mental filing cabinet for a few years down the road. This would be a great next step for her. I think it is such an awesome way to help prepare our kids for the “real world.” I know from experience how disastrous that culture shock can be when you first move out on your own, you’ve got your own paycheck, and the credit card applications start showing up in the mailbox. I wish my parents had done something like this with me when I was a teen. Thanks so much for writing this!!

  10. Debbie says

    Wow, what an amazing idea. However, I don’t even have a concrete budget I can stick to but maybe my National Merit Scholar semifinalist seventeen year old could figure it out for me! Haha! I may have to give this a try.

  11. Krysten says

    My kids are only (almost) 3 and 6 months. BUT, my 18-yr-old BIL is living with us and has NO concept of managing money. It’s hard because his mother never taught him, and it kills us to see him throw away his money, knowing the problems he’s headed for. We try to talk to him about budgeting and saving and not wasting money on useless items, but there’s a brick wall around his head that keeps good advice from going in. Maybe my husband would try this with him. It’s kind of scary, though!

  12. Emily says

    I had to do this about the same age as this kid. My mom did an internship in California and we live in Kansas. My dad was not a checkbook person nor a bill. I had to do it for him and for that I am thankful. I remember hating it when I did it but it taught me well enough that when I turned 18 and had a dispute with my parents I left the house and was able to take care of myself. Now I have 6 kids and a husband and manage our finances. I have a bit in savings that we are not allowed to touch. I act as though its not there just so we have to manage month by month. At first my husband thought it was crazy and I made myself more stressed but now we have a newer home that is double our old house payment and we are still good because I pay everything off early. We have never had a auto payment for more than 2yrs saving us lots of money on interest. I am definetly making my kids do this.

  13. Laura W. says

    My parents had my sisters and I do the same thing when we were 16 years old. We were not homeschooled, but were handed the family checkbook and actually wrote out and mailed (or personally handed in) each bill for at least 3 months. We had to have all the bills paid on time and correctly balance the checkbook for 3 straight months and if we made an error one month, the time started over. To this day I am the one in our house who takes care of the finances. It was a very powerful life lesson that I am excited to have my kids repeat in a few years! So glad to hear other people are doing something similar with their kids!!

  14. Beth says

    What a great article! Thank you so much for sharing. My oldest is 6, so it will be awhile before we could apply something like this, but I love it! I was taught some basics, but the real-life application was missing until I was on my own. Advice was given freely, but the idea of my doing the finances for my family would never have been an idea that my parents would’ve entertained (it being none of my business what the family finances were like.). I think it’s a fantastic way to show the importance of being responsible with one’s resources, especially when others are directly impacted. It’s a great way to prevent poor habits from developing when a person is only responsible for themselves. I also am encouraged to keep at the budgeting so that I’m a pro at it by the time my kids are needing to learn. Thank you! I will be filing this idea away for the not-too-distant future.

  15. Ksenia says

    I think this is a great idea, for all the reasons mentioned already. But I think something needs to be said for the kind of great relationship you and your son have and will have, considering the trust that is involved in this process. Great job!

  16. Anne Marie says

    Love this post! My oldest is 5 yrs old right now, but when we get to the high school years, you can be sure we’ll hand him over the family budget!

  17. says

    Great lesson! When I was 16 my parents put me in charge of our grocery money. They gave me a budget and I was responsible for buying the groceries each week. My mom would frequently give me a list with specific ingredients needed for dinner but since I also shared the dinner-cooking responsibilities I put together my own lists too.

    I quickly learned the importance of making sure that there was enough money to cover the food for the main meals before any “treats” could be added. This was also when I discovered coupons so that I could stretch the money farther and still get treats :) When I went away to college 2 years later I was more than ready to do my own grocery shopping and cooking.

    • hope64 says

      Brooke,

      I love your idea too. Our son got a taste of the grocery budgeting with tracking the expenses for six months. It DID remind me of the importance of getting him into the kitchen more. Boys need to be able to cook as well as girls. Men need good kitchen skills, too.

      Hope

  18. Jen says

    I wish my parents had done this. To this day I have no idea how they manage their finances. They were always so tight-lipped about it except to be sure we knew how broke they always were. They fought about money constantly. I got to where I wouldn’t ask for lunch money and if we didn’t have anything to take in the kitchen, I just didn’t eat. But then we would go on an extravegant vacation every year. So I don’t get it. Their answer for us for when we got into financial crisis was to borrow more money on our house. I’m so very grateful we found a Crown financial advisor before we did such a thing! I pray for them a lot and kind of worry what kind of mess will be left for me when they pass on. Leaving that in God’s hands though.

    • Nichole D. says

      Jen it was the same way when I was growing up. I had no clue about money, but always knew there wasn’t enough of it to go around. I rememberoverhearing hushed conversations about it when I was supposed to be sleeping. My parents never taught me to save, never encouraged it, and now as an adult I am learning from my mistakes (huge student loan debt, rolling negative debt into car loan, buying a house with 0% down because I thought I needed it and was encouraged to buy it, credit card debit, etc). My Mom still spends like crazy and always complains about never having enough money. Every week theres something new at her house (new clothes, dishes, etc). I don’t understand how she can just buy, buy, buy and have $0 in retirement and not even worry about it. I feel horrible accepting a Christmas present from her that I know she bought with a credit card at 24% interest! I am storing this away for future use as I plan on throughly educating my 6 year old about the money education that I never got.

  19. jessica says

    Awesome! I will certainly be doing this with my kids. What an amazing lesson that means SO much.

  20. says

    WOW! You are blessing your son with some great skills and practical experience that is going to benefit him and his future family for the rest of his life. Good for you! What an inspiration this post is to those of us with kids.

  21. coupon woman says

    I’m thrilled to see parents truly teaching their children (through practical, hands-on ways) about money management instead of just giving them whatever they want and expecting them to learn these skills on their own somehow, someday. That seems to be a huge problem with our society in general (and especially kids & teens) – people just expecting things and not understanding sacrifices and hard work and the cost of living. Job well done – I’m filing this idea away for when my kids are older and need this kind of experience and lesson!

    • Melody says

      What a wonderful idea! My oldest is only 6, but I am already thinking of how I want his introduction to managing the home to be different from mine was. I had some great instruction and knew how to pay bills and balance a checkbook when I left for college (and to not get in debt) but wish I had had more exposure to how much money it takes to run a household. I’m hoping by the time my ds is a teen our budget will have more room for extras (we are also homeschooling on one income, and I’m still not sure how we manage it), but it helps now to know that managing the budget has helped your son be more conscious of spending decisions without added stress. Thanks for posting this! Please pass along any tips you have for younger children too!

      • hope64 says

        Melody,

        We, too, have had a VERY tight budget for homeschooling over the years. My best advice is to be VERY intentional in sharing with your children ways in which God has supernaturally met needs through the years. For instance, my middle son asked us for piano lessons. We had just read “Raising Kids for True Greatness” (a book I HIGHLY recommend) and in it Mr. Kimmel cautions parents against always telling their children, “We can’t afford that.” He reminds us that God will sometimes give our children a desire from HIM and it is a testimony to them when they see God provide a way. So, we prayed with him about lessons. Less than a week later a local piano teacher, who knew that I was interested in lessons, called and asked if I would be willing to barter with her for lessons for my son!About six months later, when the barter didn’t work out any more in her schedule, our finances had loosened up just enough that we could afford the lessons. I NEVER need to remind him to practice! He had seen God work a miracle on his behalf and he has never taken his lessons for granted! So, it’s not the lack of money that will be the memorable thing, it will be God’s provision.

        Hope

  22. says

    I love this! I learned a lot about budgeting and money management at a young age because my parents did something similar-every week I sat down with my mom and we paid the bills together. I would write out the checks and she would sign them. I would also have to balance the checkbook, down to the penny. To this day I get nervous if my checkbook is a few pennies off!

  23. says

    How I wished we learned these important lessons when we were young!
    So many parents think they are doing a favor by shielding their children from the hard reality of financial management and general responsibility (especially in regards to chores!)

    What terrific insight for your son!

  24. sheeba m says

    Great Advice here….Its so vital to our education to know how to handle your money…My biggest regret is that my parents taught me well to save and cut corners but they never taught us the basics such as writing a check(so embarassed at 21 when my personal check got sent back), keeping a budget etc.

  25. JP says

    This is fantastic. It has inspired me to follow a similar process with someone in my family. Thank you Hope!