We wonder how quickly our girls grow up. Next month when school starts again we have a fourth grader and a kindergarten teacher.
While we have some time before they are ready to leave, we now want to spend time preparing them for the big transition. As a parent, you probably feel the same way.
Learning (and sticking to) the budget is a crucial part of any financial foundation that children, especially teenagers, must master.
While they are at home now, you have a fantastic opportunity to introduce them to their money management.
If you're not sure where to start, here are some tips from fellow parents and personal finance experts to make teaching this life skill a little easier for you and your teen.
Teach your teen how to budget for real life
Youth or not, when most people hear the word "budget" they hear the word "no" too. To them, budgets feel like a strict diet. Just as diets fail, an unrealistic or extreme budget will most likely discourage your teen and they will quit.
The first step before even talking about the numbers is to discuss exactly what a successful and sustainable budget should be. When done right, a budget will help you move your money towards your goals. Explain to them that the budget at its root is simply a plan of what you want to do.
You want a budget that can cover:
When your teen's budget covers these goals, not only will they get their finances in good position, but they will also move closer to their specific long-term dreams.
Create a manageable budget (they'll actually enjoy this!)
Once your teenagers understand how a budget works, it is important that they create a budget that they can use in the real world. You can honestly budget whatever you want, but an easy budget to get your teen up and running is the 50/20/30.
Quite simply that 50/20/30 budget puts money in these three main buckets:
50% go into the essentials
20% for savings (or investments)
30% for fun and discretion
I appreciate how easy and flexible this budget can be. You can adjust the percentages to suit your teen's needs, but it does give him an idea of how to split his finances when he's out alone.
How do you start with this budget?
With teenagers, you can have Expenses such as clothing or their cell phone bill count as essentialor you want to give your child the experience of being responsible for a small, shared family account while they are still at home.
For older teenagers, you can even charge them a nominal "rent" to make up their part of the bills. In some cases, parents give this money back to their child as a gift to help with moving expenses (e.g. for their security deposit) or to use as additional savings.
Whatever you choose, talk about it so your teen understands why you're doing it this way.
Share your family budget
Creating a budget isn't complicated, but it can be tricky when your teen has no idea what to expect. Knowledge can be empowering.
We may take it for granted as we have to deal with the numbers, but your teen may not know how much it takes to keep the lights on and the roof over their heads. If you haven't already shared your own budget, now is the time to do so.
If they don't know, they will also be put at a disadvantage when looking for a place or comparing prices on costs. Being armed with the numbers makes your teen an informed consumer.
When your teen breaks their budget
Will there be times when your teen messes up their budget? Probably. However, this isn't necessarily a bad thing. As parents, we tend to protect our children, but we also need to prepare them for the real world. As Ron Lieber, author of The opposite of spoiled, indicated that we should let our children make financial mistakes.
Wouldn't it be better for your child? break the clothing budget while they are still at home so you can walk them through instead of breaking their monthly budget while they are alone and have to pay bills?
Mistakes will happen, they are a part of life, so giving your teenage time to work on them and adjust their budget is a boon to their future selves.
To have basic accounts for your teen
Since these are budgets, we should also mention some important accounts that you want your child to have so they can practice managing their money.
Opening checking and savings accounts for high school students (usually free, inexpensive, and with no minimum balance) are good basic accounts for your teen. You can deal with real-world situations involving fees, automatic transfers, and direct deposits.
How Family balance Founder Kristia Ludwick pointed out that teenagers should have the ability to balance a checkbook even if they choose to go purely digital with their banking business.
If they work, discuss it together and see if they can open an IRA and make contributions. It doesn't have to be a lot. The idea is to familiarize and familiarize them with the basics of investing.
Even if they're making $ 25 a paycheck, practicing budgeting for long-term and short-term goals is an invaluable lesson. You can also encourage them to contribute by offering a match for what they entered.
How teenagers can easily keep track of things
With multiple accounts to keep track of, your teen needs a simple system to keep track of their budget and goals.
With mintyou can link your accounts in one safe place. They can also add their budget along with the savings goals they want to achieve and make sure they stick with them.
Hopefully these ideas and tips will help your teen transition into a self-sufficient adult.