Learn how to teach teens about budgeting. This will definitely help your teens to learn how to manage their finances effectively and efficiently.
Even with eighteen years at your disposal you might have trouble imparting the many life lessons your kids will need to learn before they leave the nest and head out into the real world. There just never seems to be enough time to teach them all of the essentials in order to ensure that they can manage without you. And yet, you’ll still do your best to help them function socially and become the caring, competent, and responsible people you know they can be. But amongst the lessons about respecting authority, showing tolerance towards others, and developing a strong work ethic, you may have forgotten about teaching them less seemingly important skills, like how to properly manage their money.
Teaching Your Teen How to Budget
So here are just a few tips when it comes to showing your teens how to create and sustain a budget.
1. Start as Early as Possible Teaching Your Kids About Money
The best policy is to start as early as possible teaching your kids about the value of money. You can do this most easily with a system of chores (work) that result in allowance (pay). This is the basic system they will deal with in the working world, so the earlier they become familiar with the formula the more likely they are to embrace it. Of course, the other side of income is expense. But you can’t necessarily charge your kids rent or make them pay for their own groceries. So how can you teach them to budget wisely?
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2. Stop Buying Them Things After They Finish Their Allowances: Financial Discipline
First, stop buying them stuff they don’t need and giving them money arbitrarily after they’ve spent their allowance; these practices totally negate the financial steps you’ve taken with chores and allowance (work for pay). If you simply give them money (or things with monetary value) it will only serve to confuse them. Do they get money by working or do they just have to beg for it? Why save up for a Barbie Dream House or the Delta Force Black Hawk Down video game when they know you’ll get it for them? In the real world you don’t buy your dream home or become a Delta Force operative by being entitled and demanding it. So you can see how you might be leading them astray with your inclination to give them everything their hearts desire. By withholding you will force them, to some extent, to prioritize their spending, which is an excellent lesson for your kids to learn at any age.
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3. Buy a car and Let Them Work to Maintain It
But when it comes to budgeting successfully you really need to take it a step further. And with teens this is pretty easy because there is at least one thing they want that they will have to work to support: a car. And here you can give them something far more valuable than their first set of wheels. By making them pay for this privilege themselves you can give them responsibility and a sense of pride in ownership (it will be a lot more valuable if they have to work for it, and they will take the responsibility of upkeep far more seriously when the cost comes out of their pockets). But you can also teach them to budget.
4. When They Start Work Help Them with Their First Budget
Once they have jobs, sit down to discuss what they can afford on a monthly basis. Break down the ongoing costs for car payments, insurance, registration, gas, and so on so they can see how their income and expenditures function together. If you are so inclined you might match their funds so they can get a decent car (for safety’s sake). But make sure they pay at least a portion on their own and that they understand how to create a budget that allows them to live within their means.