We have a teen who is earning money various ways and starting first part-time job. We want to teach her budgeting. Putting money into a car, college, clothing etc. Do you have any suggestions of some proven methods of free spreadsheets or website to utilize with her? Need something so she can see savings progress and also what she is spending. -Laurie
What a great question, Laurie! It just makes my heart happy that you are teaching your daughter about budgeting while she is young. So many adults would be in a much better financial position if their parents had encouraged them to start budgeting from an early age.
Here’s my advice on how to teach your teens about budgeting:
1. Set a Great Example
One of the best things you can do for your child or teenager to help them learn financial skills is to model great financial skills before them. Let them see you being thoughtful and intentional about your purchases.
Let them see you waiting to make a purchase until you can afford it, or getting creative to find ways to pay cash for something, or being wise with your money so you have more to give generously.
By the way, if you don’t have a budget that your family follows, now is the best time to do so. Don’t expect something of your teen that you aren’t also doing yourself! 🙂 I highly recommend reading The Total Money Makeover by Dave Ramsey if you need a starting place for setting up a budget.
For more encouragement, read my post on 6 Things My Grandpas Taught Me About Financial Success.
2. Talk About Finances Openly
Many families aren’t very upfront about their finances with their kids. And I think this does a disservice to your children.
I’m not saying you need to share all the details about how much you make and spend, but where appropriate, I think it’s so helpful to bring your kids into financial discussions.
Talk to them about how you’ve set up your budget. Show them what’s working for you. Bring them with you when you go to the bank. Explain why you’ve chosen not to use credit cards or why you pay with cash or why you buy used cars.
For more encouragement, read this post on 4 Ways to Teach Your Kids Money Management.
3. Set Up a Budget Together
Help your kids set up a budget from the time they start earning money. You can use a basic budgeting spreadsheet like this one. If you want something a little more complex (or your teen is more of a techie!), there are a lot of apps they can use for budgeting. (Here are 6 different apps to check out.)
Our family uses the You Need a Budget program and we can’t sing its praises highly enough. We use it for our personal budget and our business budget and have also used it with one of our kids who wanted to use it for budgeting.
I’d recommend sitting down together and making out a basic plan of what percentage of their income they want to save, give, and spend. Then, break those down even further by mapping out what their expenses are each month.
Once you have this in place, then it should be pretty simple for them to divvy up their paycheck every week/month into the proper budget categories. If possible, pick some kind of program or spreadsheet that allows them to constantly have a running total of how much they have left to spend in each budget category. (This is why we love YNAB!)
By the way, YNAB offers a free year of their program to college students!
For more encouragement, read my post on 3 Practical Ways We’re Teaching Our Kids About Money.
4. Provide Accountability
When your teen is first learning how to set up a budget, they’ll probably need lots of help from you. You can totally hold their hand at first, but as much as possible, have them be responsible for setting things up, planning out their goals, thinking longterm, and actually doing the work of inputting what they make and spend.
Remember: your goal should be to raise responsible adults not co-dependent kids, so don’t micro-manage their budgeting. Instead, just provide oversight and accountability for them to develop the habit of budgeting.
For more encouragement, read this book on Why We Let Our Teenager Manage Our Budget.
5. Let Them Make Mistakes
It’s easy and natural as parents to want to protect our kids from getting hurt or making mistakes. However, I’d much rather my kids make small mistakes when they are young in order to hopefully prevent much larger mistakes when they are older.
Want more tips on what we are doing with our kids? Listen in to our podcast episode where Jesse shares how we are teaching our kids to be responsible with money as they get older.
What advice or suggestions do you have for Laurie? What are your best tips for teaching teens how to budget?
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