Without a household budget, you'd probably find that a lot more bills are going unpaid or that you're spending way too much money on eating out. Creating a budget is an essential life skill for you -- so it should also be a skill that you encourage your teen to learn. Your teen may need some guidance to learn the basics of setting and sticking to a budget, but over time it should be a responsibility she can take on by herself.
1 Buy a pocket-sized notebook in which your teen can write down everything she buys in a month's time.
2 Assess the list with your teen after a month and help him decide which items are "essential," "desired," and which ones he might need to cut out to avoid spending more money than he earns. Add up the cost for monthly essentials, then add a bit more for those desired expenses, and come up with the amount of money your teen will need on a monthly basis.
3 Discuss the ways in which your teen will earn money. If she gets an allowance from you, consider giving it to her monthly instead of weekly, suggests the Money and Stuff website devoted to teaching kids and parents about money, so that she'll have to spread out her cash over a longer period of time and be better about budgeting. If she doesn't get an allowance, help her brainstorm ways to earn money, including babysitting, dog walking or a more formal job.
4 Buy a small "Expenses" or "Cash" notebook from an office supply store in which your teen can write down his projected expenses -- those "essential" and "desired" items -- as well as track the money that's coming in. If your teen is more technologically-inclined, you'll also find countless mobile apps that allow you to enter in a monthly income and track essential and desired expenses. At minimum, the expenses sheet should list the things she'll spend her money on -- typically listed along the left-hand side of the page, with columns for "Projected Amount," and "Actual Amount" along the top of the page. Help your teen fill out the "Projected Amount" column, and then encourage her to fill out the "Actual Amount" and subtract the amount from what she has left.
5 Check in with your teen every month or so to find out how she's doing with keeping track of her expenses. If she's overspending on non-essentials every month, help her look over the expenses sheets to find ways where she can cut spending, such as eating out less or spending less money on clothing or accessories. If she's overspending on essentials, help her come up with new ways to earn money, or offer to increase her allowance in exchange for doing more work around the house.
Items you will need
- Pocket notebook
- Budget book or app
- Encourage your teen to create a line item on her budget sheet called "Savings." Then encourage her to put a small amount into a savings account or piggy bank each month. This can help your teen save for a big-ticket item or put away money for the future.
- Setting up a bank account can also help teens learn to budget. Most banks offer some type of budgeting tool that tracks the type of items you're buying, making it easy to create an expenses paid sheet at the end of each month.
- Don't bail your teen out if he overspends his budget. That will set him up to think he can get a bailout any time he blows his budget, reminds Money and Stuff.
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