When is a good time to discuss savings and budgeting with your teenager? Financial professionals suggest a good starting point is when children begin to receive an allowance. But don’t get discouraged if you didn’t start then; it is never too late to introduce savings and budgeting to your child.
Now that summer is here, your adolescent may insist on needing a job and be enthusiastic about the idea of earning his or her own money. But most teens work so that they can spend. Teaching yours to set a budget can be useful in curtailing his or her spending and encouraging savings.
Begin by keeping it simple. Ask what your teen intends on doing with the money he or she earns. Then suggest waiting 30 days before spending any bit of the paycheck. This tactic cuts down on impulse buying and helps to identify what your child needs versus wants.
Create a Budget
During the 30-day waiting period, encourage your son or daughter to create a budget. A budget is a useful tool for keeping track of spending habits.
Ask your teen to identify what he or she actually spends each month on food, entertainment, cell phone, and clothes. Use real numbers, not estimates.
Dig through your own personal bank and credit card statements to help your teen figure it out. This process will easily show both of you the areas where he or she may be overspending.
Spend Less Than They Earn
Lastly, remind your son or daughter to spend less than they earn and put away that difference for the future. This budgeting and financial planning will help your teen achieve his or her short-term and future financial goals.
Learning and practicing good financial habits now can serve to support your child’s emotional growth and financial independence in the future. Practicing these strategies will help them get there.
It's never too late to supplement your teen's school education with lessons at home. For more tips like these, read our YOU: Your Child's First Teacher books, available on Amazon.