How to Teach Teens to Budget Money

Teenagers need to see how money works in the real world, including where it comes from and where it all seems to go.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Calculators
• Bank Account
• Checking Accounts
• Credit Cards And Loans
• Calculators

1. Explain to your teen how checks and credit cards work, and how banks operate. Be sure to mention interest payments and service charges.

2. Give your teen a weekly or monthly allowance, unless she has a job and considers herself financially independent.

3. Agree on what you will pay for and what the teen will pay for. Consider car insurance, gas, school clothing, fees for extracurricular activities, the phone bill, and so forth.

4. Give your teen financial responsibilities that you have both agreed on.

5. Teach your teenager how to make a budget. Make a list of the teen's monthly expenses and the dates they must be paid. Sit down with the teen and explain how her income or allowance must be managed to meet the expenses.

6. Have your teen open a bank account. Most teenagers are impulsive, so not having cash in hand may keep the spending down.

7. Set goals. Talk about saving for college, cars, entertainment systems, mountain bikes or other big purchases. Make clear what you plan to pay for and what you expect of the teen.

Tips & Warnings

• Part of teaching a teenager to be financially responsible involves the parent not caving in. If your teen blew all of her money on a new outfit at the beginning of the month and now doesn't have enough left to go to the movies with friends, be sympathetic but don't bail her out.
• If you have to get your teen out of a financial bind, make arrangements for her to pay you back over a designated period of time.
• Most teenagers get offers from credit card companies while still in high school and can obtain a credit card without your signature. Putting this kind of buying power in the hands of an impulsive teen can sometimes be disastrous.

Who Can Help:

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[theraclitus]

on 12/14/2008 This is great advice, especially the warning about credit cards. When your teen is in debt he or she is headed for serious trouble.

on 8/8/2006 When I got my first job I wanted a car. I had just gotten my permit and so my mom told me to start saving. I saved for three months and when my mom told me that I had saved over $2000, I was in shock. We went out that weekend and bought my first car. :)

on 8/8/2006 Don't spend your money on unnecessary items. Recognize the difference between a want and a need, and only buy the needed things.

on 6/30/2006 I teach 9th graders about personal finance. The best thing you can do now is discuss budgets with them, show them how to balance a checkbook, and talk to them about your personal budget. The more they see you making good decisions they will look at their own. Please share with them how fast money is spent for all the budget categories and how their is often not a lot of money left for savings at the end of the month/week.

on 3/12/2006 Don't spend your money on unnecessary items. Recognize the difference between a want and a need, and only buy the things you need.