Budgeting for Teens: A Guide to Financial Independence

Teaching your teen how to create a budget can be a difficult task. Teens like to spend, and most are not interested in saving their money. Teens have a harder time thinking about saving for the future, and they like to have immediate gratification of purchasing what they want. It is also difficult for teens not to have certain things that their peers have. However, if teens aren't taught how to budget their money, they will grow up to be adults who can't budget their money. Teaching them now will put them on a good track to financial success in their future.

Decide on an Amount

Decide with your teen on an amount that everyone can be happy with. Perhaps she must save fifty percent from her job, birthday money and holiday money. The amount can be any amount that your teen can be happy with and that will still give her a good sense of what it means to save.

Give an Allowance

Perhaps instead of buying your child shoes, clothes and school items, you could give him the money and have him shop for himself. This will show him how to manage his money and understand the value of money. He will realize he can't buy a hundred dollar pair of shoes or he won't have enough for all of the other items he needs. Make your teen pay for luxury or entertainment expenses out of his money. He can pay for movie tickets, trips with friends and eating out with buddies. Don't allow your teen to ask for extra money. Create a set amount he will receive each week and let him manage it himself.

Teach Them to Save

Once there is a predetermined amount of money to save, decide with your teens what they are saving for. Set up a savings account with them at the local bank. If they are saving for college, cars or just slush funds, let them make the deposits themselves and see their money grow. Don't simply take the money for them to the bank. If they do it themselves, they feel more control over the saving.

Teach Them about Needs and Wants

Teens and adults alike have a similar problem with spending: overspending. It is easy to waste money on unnecessary possessions because you simply want them. Especially when it is not your own money but your parent's, it is easy not to feel bad about purchases. Teach your teen why some things are not important in life and why having the newest and best of everything is not important. If your teen really likes expensive electronics or clothes, that's okay to an extent. As long as she is saving as promised, the remainder of her money can be used as she wishes. She may have to save up that money to purchase something, but then she will have more time to decide whether it is worth it, and whether she really needs it.