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Home » Advice » Teach Your Teen the Basics of Budgeting

Teach Your Teen the Basics of Budgeting

A Resource from Dave Ramsey

Copyright © 2011 The Center for Youth Ministry Training

Editor's Note: We want to equip youth workers to help the families in their ministries tackle the often tricky topic of teens and money with a positive, effective plan. Visit our Facebook page (facebook.com/ymtoday) and join the discussion on how to bring up the topic of budgeting with your students and their parents.

The ultimate goal of a parent is to be able to change your family tree and pass a legacy on down to your children's children. If you want that legacy to be a blessing and not a curse though, you need to teach your kids how to handle money. It is never really too early to start teaching your kids about money. And the earlier you start, the better good saving, spending, and giving habits will develop.

Teens want to learn about money and make informed decisions. But we as adults have to arm them with the information. We don't want them to end up like Vince, a guy who called my radio show. Vince signed up for multiple credit cards during his sophomore year at college to get the free campus T-shirt. He wasn't going to use the cards unless there was an emergency, but there was an "emergency" every week, and soon he was $15,000 in debt. He couldn't make the payments, so he quit school to get a job. The problem was, without his degree, his earnings were minimal. Worse than that, he also had $27,000 in student loans. Student loans aren't payable while you are in school, but when you leave school by graduating or quitting, the payments begin. Vince was one scared twenty-one-year-old with $42,000 in debt, but making only $15,000 per year. What's scary is Vince is "normal." I was able to talk Vince through a plan to get rid of his mess. But, don't you think it's time we started to teach teens not to get in this kind of mess in the first place? I hope so.

Studies by the JumpStart Coalition, Charles Schwab, and others say that students are graduating without knowing how to balance a checkbook, how to live within their means, or how to save for the future. Why? Because no one is teaching them! You can't graduate without knowing what an amoeba is, but the basic life skill of how to handle money is not required. The number one way kids learn is by example and they are watching you.

That is why when our kids were ready, my wife Sharon and I opened a checking account for them with a debit card. But remember: no credit cards! We then established what portion of our budget was going to their clothes, entertainment, etc. Then we explained to them that from now on we were no longer paying for virtually anything directly, but we would be giving them X dollars per month to live on. If our daughter buys one dress and blows it all, she can't go to the movies. If our son eats at too many expensive restaurants with his friends, no new clothes for school. The bargain shopping, the conscious decision making, and the discipline were extreme, adult like, and gratifying. The giving was systematic, God led, and mature. Teenagers will feel very adult and act like it. Your teen will learn to balance her checkbook every month. You will watch your child decide how to spend his money rather that blow it without thought. Don't get me wrong, you will have trying times, but your kids will have a sense of power over money while many of their friends will be functioning financially at a four-year old level.

At first the idea of developing a budget or cash flow plan will not sound like much fun to your teen, but having enough money to go shopping, out to eat, or to the movies without worrying about debt or credit card bills will sound like fun. That is what a proper plan will do for your child.

Since you are helping your teen understand a budget at such a young age it will not seem like a huge monster in their mind; it does not have to be overwhelming. They do not have to be like the many hurting people that I have counseled at the brink of bankruptcy. It makes me ache inside when I know that a simple budget could have saved most of them numerous heartaches.

You are teaching your children how to live life well when you build their character and money management skills. Teach your children how to handle money now or they will come home and live with you forever. Trust me; the most powerful legacy you can leave is wise, competent children.

3 Tips on Helping Your Teen Stick To a Budget

• Write it down.  A budget is not a form of medieval torture! It is your game plan, where you tell your money what you want it to do. This isn't rocket science! Just give every dollar a name on paper.
• Stay away from places that tempt you to spend.  If you have a problem sticking to it, it could be that you are immature. It could be that you can't stay out of the mall! It's not smart for an alcoholic to hang out at a bar.
• Try the envelope system.  Take some envelopes, write the budget categories on the envelopes, and use only that money to purchase those items. If the money is not in there, don't buy it. Easy as pie.

 

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