Spending and Saving

Budgeting Basics for Teens

Teaching your teen about budgeting is an important life skill that they need to learn.

Raising children is expensive. That statement is even more true as children enter their teen years. However, teenagers do not always understand the importance of budgeting money.

Teaching your teen about budgeting is an important life skill that they need to learn. When you talk to your teen about budgeting, you can help set them up on the path to success for their adult life. It can also be a great way to bond with your teen as they age.

Teaching your teen about budgeting doesn’t have to be difficult. Here are some tips about budgeting basics for teens and how to support them. 

Help Them Track Their Spending

It is easy to go over budget if they do not track their spending. Encourage your teenager to use a notebook or spreadsheet to document what they spend every day. There are even apps that can help your teen keep track of how much they are spending

Then they can look back on their monthly spending to see what they need to cut back on. For example, maybe they spend a lot on food when they should be saving up for a family trip. Your teen can stay on a budget better if they have an idea of what they spend every day. 

Find Ways to Restrict Spending

If your teen is having a hard time resisting the urge to spend their money, they should make it harder on themselves to spend their money. For example, having your teen switch to cash-only payments can help them tell how much they are spending. 

When we get in the habit of using a debit card for everything, it doesn’t feel like we are spending money because we cannot see it come out of our wallets. It is not until we check our account that we realize how much we have spent. 

Another way your teen can limit their spending is by leaving their debit card at home entirely. They can’t spend any money if they don’t have it on them!

Come Up With Free or Cheap Ways to Have Fun

Your teen might not consider money to be an issue when they want to spend time with their friends. However, if they spend all their time going to the movies or hanging out at the mall, the cost adds up. 

Help your teen come up with alternate ways to hang out with their friends that don’t involve spending money. For example, they could host a movie night at home with their friends instead of going to the theater. 

Consider Helping Them Get a Job 

If your teen is old enough, they might be interested in getting a part-time job. Not only will they have more money in their bank account, but they can get work experience and start building their resume. Help your teen apply for appropriate positions and offer them support as they join the workforce.

Talk to Your Teen About Their Savings Account

Teens should learn about the importance of saving. If an emergency happens, they need to be prepared. The earlier you talk to your teen, the better off they will be prepared as an adult. Teach them the 50/30/20 rule. They should use 50% of their budget for their needs, 30% for their wants, and 20% for their savings. 

Their needs may be something like their phone or car payment. Their wants could be anything from clothes to coffee. No matter what they decide to spend their money on though, your teen needs to be saving part of it. 

Work with your teen to come up with a breakdown that works for them. Maybe the only money they earn is from their allowance or they do not need to spend a lot on their “needs”. Help them come up with a plan of how to split their money so they can understand the importance of budgeting. 

Remember that your teen’s brain is different from yours. Talk to them about their financial decisions. Teenagers’ brains are not fully developed and they are not able to think long term. 

That usually means they do not see it as a waste to spend money today on a video game that they will play once and get bored of. Help your teen understand how to make better choices about what they spend their money on.

Let Your Teen Fail

They will not learn the consequences of their actions if you do not let them mess up sometimes. Teens are more likely to keep track of their spending if they have had to be responsible for unexpected expenses. 

Maybe they broke something and have to pay for it to be repaired. If it’s not too big of an amount, let them cover the cost instead of offering to pay for their mistake. Once they understand that actions have consequences they will understand the importance of planning for the unexpected. 

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