Over the next few weeks I am going to be sharing Money Management and Budgeting Tips for Teens. (The same ones we taught our own teens.)
I also have a *FREE* Teach Your Teen How To Budget Workbook that you can get HERE.
I do. In fact for the first 12 years of our marriage we lived paycheck to paycheck with *almost enough to pay the bills. It was rough.
I still remember the first time our power got turned off. The first time we got a call from a collection agency because we hadn't paid our car payment on time. We spent those first 12 years stealing from Peter to pay Paul.
We wanted better for our kids, so we decided to learn better ways to manage money.
Our life really started to turn around once we learned how to handle our money. What helped us the most was going through Dave Ramsey's, Financial Peace University. One of the principles he says to use with your kiddos is to teach them to divide their money, as soon as they get it, into 3 categories. Give, Save and Spend. Our kids used jars they decorated for spending money, kept giving money in their wallet to help any good cause they came across and we drove them to the bank to deposit their saving money into their savings account every month.
This has been so precious to watch. When they were young, I remember my son trading his dollars at the bank at WalMart for quarters and dropping them in the St. Judes collection machine, one quarter at a time. Later their youth group adopted a Compassion International child and they gave their money to that cause. As they continued to get older we saw them donate to the Salvation Army Red Buckets and also buy gifts to give to the less fortunate in our town. Letting them build that muscle just melts my heart. Now, both teens tithe their money from their paychecks to the church and I dare say I think it is becoming a solid habit. :)
From an early age, we told the kiddos they would be purchasing their own car and needed to keep that in mind as they put money in savings. We also let them know that once their savings account reached $3000, we would match it.
Once each teen's savings reached $2500, we would pull them aside and tell them how proud we were for coming so far with their savings. Then we would offer a quick buy out.
"Now, if you would like, we are willing to make your money right now - $2500 for $2500. You get to double your savings right now and we save $500... but it is totally your call."
In both instances they chose to wait til they reached $3000. I am going to say that is a win for a lesson in delayed gratification.
Last year Hannah wanted to go to a wedding across the state (where we had just moved from) and the most feasible option was to fly. She used some of her savings money to make the trip possible. (About $800) By the time she got back from the trip she had a job waiting for her and she has been systematically putting a larger percentage of her part-time job paycheck into her savings and has now replaced the money she borrowed from herself. *PROUD MOM MOMENT*
Now that her savings account is more than refilled, she is still putting 10% to her savings, but now the large percent of her money is going into her SPENDING money to go to London in a few months. *EVEN PROUDER MAMA – using her OWN MONEY to go explore the world…yeah she is my kid!*
The SPENDING part of the budget is easy to understand - SPEND on what you want. They still go to the movies and buy passes to the local amusement park for summer fun, but now they also save/gather their spending money for bigger purchases. We let our kids spend their spending money as they wish, but occasionally we may mention, "aren't you wanting to get that replacement part for your drone?" Or "wow, you must really be ahead of schedule for the London trip"... Sometimes they say "oh, ugh, I forgot" Other times they say, "yeah, but I'm good. See ya mom!" Shiny Objects Syndrome happens to this grown up too! #thestruggleisreal
One thing I have noticed as we have shared how we teach our teens how to handle money is that everyone wants to use some of the tips, but also want to come up with some of their own tips. With that in mind, I created this FREE WORKBOOK so you can create your own budgeting lesson plans for your homeschool teen.
Talk to your teen about the money they bring in from working. If they plan to babysit for the summer, now is a GREAT time to talk in hypothetical with them….
“I am really excited you want to earn money by babysitting this summer. You and those kids will have such a blast! Do you know how much you will be getting paid?” (If not, that is a convo for another blog post, but not being afraid to ask how much you are getting paid is a great life skill!)
“Ok, since you know you will be getting paid $100 a week to watch the kids for 2 days a week, that is some good money! Let’s talk about what you want to do with that money….”
Explain that you want them to give some, save some and spend some. Then say, you don’t care what percentage they choose to put in each, but you do care that each category gets a percent. And they must stick to it all summer. If they aren’t sure what percentage, they can split all three even. Remind them that savings money is still theirs, it just isn't to be touched for a while. Maybe brainstorm some cool ideas for spending and giving they could do. Maybe they want to spend money on a concert or special jeans.
Once y'all have worked together to decide how much is going into each category, write it down and put it on the fridge. For the first few weeks, help them divvy it up. Once they've got it down, just check in each week to make sure they did it. Also, make sure to celebrate as they have fun with their money and use discipline to save and give some of it.
I have to remind myself, our encouragement is gold, isn’t it?!
Next, if they don’t have a savings account, take them down to your local bank and create a savings account for them. (Our bank required a social security card and a copy of their birth certificate to get an account, but they are free because they are minors.)
Teaching your teen those first 3 basic principles is a HUGE first step! Think about when you were a teen and you got babysitting money. What did you do with it? I blew it ALL! What if we had put even a 1/10 of that into a savings account?
Practicing these small ideas create HUGE momentum. When they understand they are the ones in charge of their money, it is easy to tell every dollar where to go when it comes time to budget.
As our teens get ready to go into adulthood where the money will be more, the rewards will be greater, the temptation will be stronger and the consequences so much more real – help your teen build the muscles of control over their money now. Life is WAY less over-whelming when you aren’t going through it blindly hoping you have enough money for what you need.
You’ve got this!
On the journey with you,
Melissa is the creator of LIFE 101 PRO, a company that creates lessons to help prepare teens for adulthood.