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A lot is often said about adults needing to learn how to budget. However, it is not just adults that need to learn how to budget the money they earn. Kids need to do so as well.
Helping your teenager to learn how to budget your money is a skill that will be beneficial to them as they go into adulthood.
If your teenager is currently working at a part-time job or even if they are only getting their allowance, showing them how to manage their money effectively is one of those life skills that have tremendous value. Here are some tips for showing your teenager how to manage their money.
Look at Income
One of the things you need to look at is your child’s income. Determining the income of your child is the first step to helping them to manage their budget.
After all, you have to know what you are working with to know how to manage the money. If your teenager gets money from a part-time job, an allowance, or money from relatives and friends on their birthday or special holidays all of this can be added up to create their budget.
You can create a budget for every month of the year if the amount fluctuates.
Note All Expenses
The next thing you need to do is to make a note of all the expenses that they have during the month. If your child is an older teen they will probably have a cell phone bill that they need to pay every month.
If they have a car they will probably need to put gas in it regularly. They may also have expenses for certain foods they like to buy for themselves.
Creating a monthly tally of the expenses is essential because it will help them to know their income and expenditure.
You should show your child exactly how to go about subtracting your income from your expenditure. This will allow them to know if they are going over budget and even if they have any money left over for savings.
If they find that they are spending more than they are earning this is the time when you will look at ways for them to start cutting their expenses.
Discuss Savings
The next thing you need to discuss is how they are going to save money. If your teen is completely over budget they will need to sit down and figure out how they are going to curb their expenses to save more money.
Maybe they will need to carpool on some days or maybe they need to stop eating so much of their favorite foods. Teaching them how to make sacrifices so that they can save for long-term goals is necessary.
After they’ve done all of this work you can then show them how to create a balanced budget. Show them how to work the numbers until they balance everything. This is a skill that will stay with them for a lifetime.
Budgeting for Recreation
While it is important to teach your teen how to balance money for their expenses. It is also important for you to teach them how to set aside money for those activities that they enjoy.
Life is about having a balance and teaching them how to save, balance their expenses and also use the money for recreation is essential.
Make sure that you show your child how to prioritize needs and wants. This will help them decide how best to spend their money.
It is important that you also show your teen examples of young people who have managed to make a name for themselves in one way or another and also have a high net worth.
For example, millennial Alexandria Ocasio-Cortez was nicknamed AOC. AOC is currently worth $200,000. This is just one example but you can find others too.
Start Wealth Building Now
Building wealth is something that you need to start teaching children from a very early age. Showing them how to effectively manage their finances from when they are young is something that will be ingrained in them as they become adults.
This will lead to less frustration when they have to deal with their expenses as adults. It will also help them to start building wealth from they are very young.
The earlier your child starts building wealth the more likely it is that they will have financial freedom as they get older.
