Teaching Your Teenager About Budgeting

November 1, 2010

Budgeting is a way of life that every teen should learn when they reach an age where they can understand the concept of money. It is very easy to spend more money than planned if there is no budget in place. By teaching your teen the concepts of budgeting, you will help them to learn how to avoid overspending and how to make their money stretch – two valuable lessons that will come in handy during adulthood. Here is some advice to get your teenager educated about budgeting.

The first lesson in budgeting is to teach your teen how to document both income and expenses. Use your household budget as an example if you have one. Show your teen where your money goes, specifically. All necessary expenses such as mortgages or rent, food, utilities and car insurance get priority over the newest gadget on the market. Once the necessary expenses have been taken care of, a stipend of the balance can be put into a savings account for a rainy day, and then the wants can be addressed.

  • If you fall into the category of living paycheck to paycheck, like many Americans do, this is a good time to teach your teen how to make your money stretch. Tips such as using coupons to cut the costs of food and clothing, or buying second-hand items, go a long way in establishing healthy spending habits in your teens. These habits will carry over into adulthood if taught properly.
  • Teaching your teens about credit is also extremely important. Credit is valuable and most people do not realize how valuable it truly is until it is tarnished. Avoid credit cards as they tend to have very high interest rates, even if the minimum payment is low.
  • Be sure to teach your teen that it takes years to build up good credit and only a few months to destroy it completely. Without credit it can be hard to rent an apartment, buy a car or a house. Teach your teen two valuable credit lessons: use credit only when necessary and do not extend yourself beyond what you can afford to pay. These two lessons in themselves will create a good credit history for your teenager leading the way into adulthood.
  • Teaching your teen how to budget and manage money properly does not have to be a nail-biting experience. If you find that your own budgeting technique could use a bit of work, why not share that experience with your teen? It is beneficial for your teen to learn from your struggles before they experience their own. Most of all, budgeting and being responsible with money is a life lesson that typically gets carried through to adulthood, and your teen needs all the help they can get.

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