The teen years – whether you love them or hate them, are the perfect time to train your son or daughter in the art of money management. After all, they will be full-grown adults in just a few short years. Not sure where to start? Check out these steps for success in helping your teenagers budget their money.
Also – your teen will benefit from my printable family budget template download. Sure, they might not need all of the categories just yet, but they can practice for the future! Grab it HERE.
Teenagers and Money
We have two teenagers in our home currently, and while we are at the younger end of the teen years, I’m thrilled that my girls are learning how to budget their money. Not only does it give them some freedom to make decisions (what teenager doesn’t want freedom), but it allows me to help “guide” them through their mistakes NOW, before it’s the difference between a car payment and eating this week.
Of course, the entire process wouldn’t work if we didn’t have an effective system in place, so if you are hoping to train your teenagers to use budget their money, you’ll likely want to use the following steps.
Step 1: Set Up the System
Before your teenager can manage their money, you have to decide how they will store and utilize the funds they receive. In our case, we use a simple debit card system. Each girl has their own bank account and, while it’s not directly linked to our main account, it’s with the same bank so that we can make easy transfers.
We chose a debit card because I wanted the girls to understand a few things:
- A debit card doesn’t work unless you’ve placed money into the account (very similar to the way cash works).
- Online purchases don’t come for free. You have to spend money to receive them. You can, however, save money at times by purchasing online and you cannot do so if you only have cash on hand.
- When you don’t track your money usage, you will face overage fees. Those fees take away from other things you may have wanted to purchase.
There is no reason why cash wouldn’t work for my girls, however, in an increasingly online and card-based society, I believe they should be trained using the method that they will more likely have at their disposal in the future.
Step 2: Consider the Amount
Our daughters are still too young to hold jobs, which means that the majority of their money comes from an allowance they receive. If your teenager has not been receiving an allowance as of yet, then it’s a good idea to sit down with your budget and determine a comfortable and reasonable-for-you amount that you will deposit (like a paycheck) at certain intervals during the year.
In our case, we get paid every month, which means our teenagers do as well.
Note: This will be different for every kid and family, so don’t compare yourself to others. Do what will work best for you so that it can result in long-term success.
Step 3: Tie “Work” to the Money
In the real world, if you don’t show up to work, you don’t get paid. Likewise, you’ll face consequences at your job if you don’t do the work you are supposed to in the time allotted. This is an important lesson for teenagers to learn which makes it critical that any allowance you provide is directly tied to “work”.
Determine which tasks your child will be responsible for consistently. This might be daily, weekly or monthly chores, school work, etc. Whatever you choose, make sure you are holding them accountable for getting those things done within the timeframe you’ve chosen. If they don’t complete the task or do so in a way that isn’t up to standard, it’s perfectly appropriate to deduct “pay”.
In our family, our girls are responsible for:
- Two daily chores each
- Weekly chores that assist in getting the home cleaned
- Completing their school work to the best of their ability, as it’s assigned
We have clear descriptions of each chore that is to be completed and when so that there is no confusion as to what a “job well done” looks like.
Want more information on how we delegate household cleaning tasks? Check out this blog post.
Step 4: Determine Responsibility
Your teens now know how much money they will receive and how they will earn that money, but what is the money they earn to be used for?
In our family, we decided to pay our teenagers a considerable amount of money each month. We want them to clearly understand that while spending money on frivolous things can be fun, it also means (in the real world) that you might have to go without something else.
With that in mind, our girls ARE responsible for using their own accounts to pay for:
- Clothing
- Phone
- Accessories and Makeup
- Self-care products
- Special shampoos and conditioners (as they deem fit)
- Coffee stops
…and any other fun items they might want to have.
They DO NOT pay for:
- Groceries
- Eating out with the family
- Transportation
- Housing
- Medical Bills
…or anything else that is considered necessary for their survival.
Of course, as I’ve said before, every family and every kid is different, so you have to make the choices that best fit your needs.
Tip: Avoid “debt”. I have one child that always wants to borrow against next month’s income. As much as is possible, don’t allow this to happen. The earlier your child learns to wait and save, the better it will be for their future financial self.
Step 5: Hands Off
Remember – your teenager is going to be an adult in just a few short years. That means it’s time for you to back off and let them make some choices. When it comes to their purchases, it’s fine to remind them that they said they needed new underwear or socks, but you have to allow them to weigh the pros and cons of their decisions. (Perhaps the result of having to do laundry multiple times per week won’t be as fun as whatever coffee drink they purchased with friends. Allow it to be a lesson they learn.)
I have one child who looks for the best deal to stretch her budget every time we go shopping. She’s calculating all of the things she needs/wants on her list and is willing to leave an item behind if it doesn’t rank as high as something else.
My other child is a spender for the sake of spending. She’s the type that will buy the first purse she sees, just because she wants a new purse and it’s there to buy, only to get home and realize it doesn’t fit her wallet AND she has no shampoo left. It’s a lesson she’s slowly learning, but one she’ll have (hopefully!) mastered before it’s the difference between a new purse and being able to pay rent.
How Do You Help Your Teenagers Budget Money?
Helping your teenagers budget money doesn’t have to be difficult. In fact, it can take a lot of responsibility off of you when they get to make the decisions themselves.
Not to mention, they become increasingly grateful for any bonuses they might receive throughout the year. And – that expensive pair of shoes they got for their birthday that they’ve been saving up for months to purchase – those become even more cherished because they know the cost.
I’d love to know – what strategies are you using to help your teenagers manage their money? Leave a comment below so we can encourage you throughout the process!
