How to Teach Adult Children How to Budget

Budgeting is important to remain financially secure.

Budgeting is an important life skill all individuals should have. It helps to manage money, keep finances straight and feel in control of your financial situation. With the basic knowledge of budgeting, even those who struggle with math can work to manage their finances. The basic skills needed are addition and subtraction and the ability to read a bank statement or track cash expenditures. If your adult child has these skills, he can create and follow a budget.

Instructions

1. Gather together two to three months of the individual’s bank statements. If the individual only does cash transactions, have him write down each time he spends money on a sheet of paper for a month or two.

2. Create a list of categories on a sheet of paper, such as housing, transportation, entertainment, utilities, food and debt payments.

3. Help the individual sort all of his expenditures for the past month into each category. If there is more than one month of expenses, see if there are any additional expenses from a previous month that need to be added to the budget.

4. Analyze each category once the sorting is complete. Is there a way to reduce spending in any of the categories? Can nonessential expenses be cut to help create more funds for essential ones?

5. Compare the budget to his monthly income. If there is more income than expenses, the budget is working. If not, additional cuts need to be made. Additionally, if there is large amount of accrued debt, additional income may be required to pay off the debt in a reasonable time. Counsel your child on gaining additional income through overtime, extra shifts or a second job. Avoid giving him or her money if at all possible. Sometimes the act of having to repay the debt is a lesson that carries them through the rest of their life.

Tips & Warnings

• Monitor the budget for a few months to see if it is a livable budget, especially if large cuts were made to any category. If too many cuts were made, it becomes useless.

• While you may want to help your adult children be financially responsible, unless there is a medical reason, you may want to avoid meddling too much in their finances. At some point, they are going to have to be able to handle this on their own. If not, you will be doing it each month for them.

References

• "Teaching Students With Moderate and Severe Disabilities"; Diane M. Browder, Fred Spooner; 2011
• "A Dollar in Your Pocket: The Art of Budgeting"; Helen Cunningham; 1995