To most teens, hearing the word "budget" will probably send them into a frenzy as they try to figure out why they are being punished, mainly because budgeting is often seen as something that forces people to deprive themselves of anything but necessities. But in truth, budgeting can empower us finically, and the best way for your teens to learn it is to do it.
Why start now?
- You know your kids’ spending habits better than anyone else — including them.
- Teens need to know there are consequences for poor spending habits. Better now than later when it could lead to serious debt or a bad credit score.
- Their sphere of influence widens immensely once in college, and parental influence tends to decrease.
Jessica Pigg from Guardian Credit Union, offered me some wonderful suggestions for balancing necessary expenses with "fun money" and saving for the future:
- “Out-of-sight, out-of-mind” saving: Open a savings account for your teens and have them deposit a set amount of each paycheck or allowance so it builds up for their future. Set an amount you’re comfortable with and stick with it. Credit Unions and banks offer different teen savings accounts – look for ones that can earn interest, meaning your teens’ money works for them while they save, showing them how money management pays off — literally.
- Good grades make money: Some auto insurance companies offer discounts for teens earning good grades, which means motivation for academics while saving money at the same time!
Teaching my teens to budget is not easy (especially for a mom who has a little time to put together a monthly family budget). However, creating a budget for them, handing it over and expecting them to make it work isn’t an effective process either. So, we are spending some time talking through some easy budget items like, “how much gas do you need each week?’ and “what do you need to get and what do you want to get?” I found that my son valued having lunch over getting gas in his car to get home (well, once his stomach was full, the gas thing became the immediate crisis).
I’m just glad we are starting now – and not waiting until he is away at college. Jessica’s advice: “Begin the process now, and rest easy later knowing your teen has the skills and knowledge to make intelligent finical decisions that set them up for future success!”
If you have any other budgeting tips or advice, we would love to hear from you!Potential Magazine is always looking for innovative ways to help teens reach their potential! (Pun intended!)