How to Teach Teens to Budget Money

By Tanya Konerman
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Learning the basics of money management is an important step toward adulthood for every teenager. Establishing a budget, and sticking to it, is part of that journey. Many schools do not teach financial literacy, so it’s up to parents to impart these important lessons. By teaching your teen how to set financial goals and priorities, control her spending, track her finances and plan for big purchases, you are setting her up for success both now and later in life, when the consequences of bad financial decisions are much greater.

Instructions

Step 1

Teach your teen about savings and checking accounts, credit and debit cards, identity theft and other basic topics through mini lessons at home or via online games at reputable financial learning sites. Give her hands-on experience in balancing your checkbook while you guide her, or teach her when she gets her first job and sets up her own checking account.

Step 2

Help your teen set goals and priorities for spending her money, such as her weekly allowance, by creating her own budget. This can start as a simple income and expenses list on paper and move on to a more complicated format as she enters the workforce and her needs change. If you haven’t already, this is a good time to discuss needs versus wants to help her make decisions about where and how to spend her money in a smart manner and to make it last until her next payday.

Step 3

Establish a monthly or quarterly clothing allowance for your teen to help her gain more long-term budgeting skills. Have her list items she might need from basic school clothes and shoes to a dress for the school dance, then determine the amount you are willing to pay toward these expenses. Let her know anything above and beyond this amount must come from her own money. Don’t bail her out if she comes up short halfway through the time period -- this is a good way for her to learn these hard lessons without too much at stake. If you absolutely must help her with an extra expense, charge her interest payable from next month’s allowance or set up a schedule during which she will pay you back with interest.

Step 4

Allow your teen to help you with a big-ticket purchase, such as a laptop or beach trip. Discuss your budget up front, then have her research the market for information and deals. Give her the opportunity to help decide where to spend less and where to spend more to balance needs and wants. Then have her join you when you make the actual purchase.

Step 5

Discuss the importance of saving as well as spending. Show her how putting aside funds for future purchases will allow her to avoid interest charges on credit card debt or even car or college loans. Let her see how big an impact such interest charges can have on the initial purchase amount via an online loan calculator found on many bank and consumer money websites.

About the Author

Based in Bloomington, Ind., Tanya Konerman is a writer/editor with more than 20 years of experience. Her work has appeared in "At-Home Mother," "Parents," "Career Woman," "Employment News," "Bloomington Business Network," "Bloomington Monthly" and the "Herald-Times." She also worked in advertising and public relations for 10 years. Konerman holds a Bachelor of Arts in journalism and psychology from Indiana University.