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How to Teach Your Teens About Budgeting

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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7 Comments

  • Archie Davis Jr says:

    Setting a good example is important. Have a plan on how to deal when your job cut hours. I had this happen to me recently for two months. My hours increased again. Find ways to be creative with Money. Keep up the great work you do.

  • Regina Robbins says:

    You use YNAB!!! Yes!!!

  • Emily says:

    We had our 15 year old son (who just got his first job this summer) do Dave Ramsey’s teenage money course – all online videos and activities. It was SO good, very well done and my son loved it. He wanted to set up a retirement account by the end of the course and start saving $100 a month from his paycheck for retirement. 🙂
    We got the course when they were doing an online special; I think we paid $39 and it was well worth the money.

    • Jordan says:

      Thanks for sharing you experience with it! He will be so happy he started saving at a young age. It’s so great that he learned so much from it and is diving in to being financially responsible! -Jordan, MSM Team

  • Jen says:

    Our 12 year old is doing extra chores at home to earn a little extra money. We are using the Rooster Money app to track her money. It’s virtual and she can setup goals with money attached. When she earns money she gets to decide how to apply her money. I have access to make changes, if needed.
    It is free.

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