Are you looking for ways to help your teenager start budgeting? (Or maybe you are a teenager looking for budgeting tips? High five!) You’re one step ahead and are making a fabulous choice!
First & Foremost, Stop the Debt Cycle
There are two things that your children learn directly from you without you even lifting a finger. The first is eating habits, and the second is money habits.
Think about it. You spend hours with that offspring of yours…
If all you do is fry food, eat microwaveable meals and avoid whole foods like the plague, what do you think your children are going to do once they are on their own? They will cook and eat the way they have been involuntarily taught by you the previous 18+ years of their lives.
It’s absolutely the same for finances.
As a parent, do you create and stick to a budget or do you go credit card crazy practicing absolutely zero restraint? Your kids (especially teenagers) are watching.
Do you live waaay out of your means or go on nut-zo shopping sprees to cope with a marital argument? Your teenager is watching.
First and foremost, YOU have to get your finances in order. You need to set a budget and stick to it. You need to live within your means. You need to use restraint and stop 👏 the 👏 debt 👏 cycle 👏! Your children will spend how you spend because they are watching!!
Your child’s financial future literally depends on you and your habits.
Teenage Budgeting Skills Are Dependent on Your Parenting Style
Second, a teenager’s success with budgeting is affected by their parent’s or caregiver’s parenting style. So what is your parenting style like?
Are you providing opportunities for your teenager to have financial responsibilities? Or are you more the type that pays for all their needs and wants, as well as bailing them out of any self-inflicted expense?
One of my favorite classes in college was Child Development. I went in expecting to learn how kids develop, but what I walked away with was much greater: parenting styles directly affect how children develop and grow. It’s all on us! Good to know!
There are four types of parenting styles:
Authoritarian, Authoritative, Permissive & Uninvolved.
If you don’t know what type you are, this article explains the different types. Have a gut check and figure out where you fit, then see you back here STAT!
Regarding all aspects of parenting, your goals should be aimed towards being an Authoritative parent, but especially regarding finances. Be involved, provide guidance, a good example, ground rules and the enforcement of those ground rules, but then let them try as well as make mistakes!
It is part of your job as a parent to provide opportunities for your teenager to learn budgeting skills. And that definitely means not taking those opportunities away when they come as consequences to their decisions (permissive parenting).
Teenagers need ground rules, opportunity for success + failure, then enforcement of those initial ground rules.
They need a job, not an allowance.
An allowance is not the way to go with a teenager because that’s not at all how adult life works.
Teenagers can work, and they can work hard! But you as the parent need to be the backbone and the grit until they learn that. And that’s OK for now!
Teenagers are old enough to get a job, do work for neighbors or more laborious work around the house as ways to earn money instead of having it handed to them via allowance. And this is SO important!
Money earned through hard work is so much more appreciated than money handed to you as a teenager. Teenagers are naturally impulsive and 20 bucks gifted is often used quickly and spontaneously without a second thought.
But 20 bucks earned by working two hours on a Saturday scooping dog poop for the neighbors after a long winter suddenly becomes a lot harder to spend.
Find, or help your teenager find a job. There are so many places that are willing to accommodate busy school and sports schedules, so that can’t be an excuse.
Real Life Example:
I spent my teenage years on a volleyball court, but if I wanted to play, I had to help pay.
So my wonderful authoritative parents provided many opportunities for me and encouraged (pushed) me to spend many evenings knocking on doors selling embroidered blankets, cookie dough or babysitting services.
I spent my summers making sandwiches at Subway, working the front desk at the local golf course and officiating little league soccer. All which were opportunities discovered & executed by my parents.
When I got paid, they then helped me pay my tithing, put some into savings and keep a portion for fun things.
After five years of paying for volleyball, volleyball paid for my bachelor’s degree! I’m so grateful to my parents for enforcing their ground rules with my love for volleyball. It paid off tenfold.
It’s a recipe for financial appreciation which is the precursor to financial literacy.
Decide What “Big Kid” Expenses They Are Responsible For
Teenagers are not adults yet, so it’s not necessary that they are responsible for everything… yet. We are only working towards that now.
But they need to be responsible for something more than just their Friday night Wendy’s run (please tell me they are already responsible for that…). They need to understand that money is a tool that requires hard work to obtain and then must be used correctly.
All families are different, but over the years I have heard a lot of wonderful ideas that would rock at helping your teenager grow some budgeting brains.
Here’s a few ideas:
- When they turn 16 have them pay for their portion of car insurance.
- If they want to do extra-curricular activities, have them help or cover the fees. Whatever is most reasonable.
- Start a monthly savings plan for college tuition.
- If they want a new car, have them pay for it.
- Make them responsible for paying for new school clothes when that time rolls around. My mom had us paying for our own clothes as soon as we turned 12. This was a GREAT way to learn budgeting skills. $40 could buy one name brand shirt and fingers crossed bump my popularity, or… I could look elsewhere.
- Paying for AP tests.
- HAVE THEM PAY FOR THEIR PHONE & THE PHONE BILL (maybe I’ll let you know how I really feel about phones later…)
- Have them pay for dating & school dance expenses.
- If it snows where you live, have them pay for their own ski/snowboarding passes.
- New sports or music equipment if they feel they need it (baseball glove, volleyball shoes, violin, etc.).
Difficulty and expense vary on those examples, but they all would do a fabulous job teaching your teenager the value of hard work mixed with responsible budgeting and saving.
The Nitty Gritty of Teenage Budgeting
Now that you’ve got a boatload of ideas for budgeting, what does budgeting actually look like for a teenager?
Keep it simple! We don’t want to rob them of some of the most exciting years of their life. But it is our duty to prepare them for adulthood.
I like to break it down into three sections:
- Responsible “Big Kid” Expenses
- Play money.
This section I fully believe is non-negotiable.
Learning to give away a portion of your hard earned money is one of the most important lessons you can learn. Especially as an adolescent. Money is not everything, but it certainly can do a world of good for a person who is desperately in need.
In our family, we pay 10% of our income in tithing. This is a hard concept to grasp as a kid. At least it was for me. But now as an adult, I’m so grateful to know that 10% is serving other people and that I learned to live on 90% instead of the full 100% because now I know I can. #blessings
So choose something to donate to. How much? 10% is a fabulous amount. It’s just enough to notice it’s missing. We want this to be kind of a struggle each time, not a piece of cake. Again, learning to do hard things! Woo!
Responsible “Big Kid” Expenses
We talked about this earlier but choose a few things that your teenager is going to be responsible for that directly impacts their life. Set those expectations and then openly let the consequences follow whether they succeed or fail.
Everything left over is now theirs to do whatever they want with. They are teenagers so this section is completely open to those last-minute concert tickets, that late night Wendy’s run or that roll of toilet paper for the neighbor’s front yard… um… wait… what..?
Cash, Debit or Credit?
Adults are rarely responsible with a credit card, so a credit card should NOT be a spending option for your teenager. Nopedy nopedy no.
A lot of families I know use cash to teach their teenagers how to budget, which definitely can work at first, but realistically, what is your teenager going to be using the most? Probably a debit card. It only makes sense that they should learn to use one with your guidance before they are thrown into adulthood.
Help them set up a checking account at a credit union.
Get them an account at a credit union. Why? Because the balance needed to open an account is often very low AND you can have multiple savings accounts fo’ FREE!! And the more your teenager has, the easier it is to learn how to budget! Seriously!!
Keeping it simple, you could help them open one checking account, then tie three savings accounts to it. One for their charitable donations, one for their “Big Kid Responsible” expense(s) and one for play money or something else of their choice.
But wait, you’re not done! You must now guide them when they actually get paid because up until now, money has just been cash and coin to them. Now suddenly with a checking account, money is a bunch of numbers on a website somehow connected to a plastic card. Help them divvy up the correct amounts into the correct accounts and set them up for success.
Doing it this way will help them grasp the concept of saving before they spend, which will drastically set them apart from the rest of the world.
You got this. You’re an awesome parent! Now get crackin’!