How You Manage Your Finances Has An Impact On Your Children
A common grievance among youth today is that they learn little about finances before entering the workforce, making it more difficult to manage their money when they finally start cashing their paychecks.
But while financial learning in the educational setting may be scarce, the truth is that they can learn a lot from how you manage your money at home. If you have a child who’s looking to work and needs help with their budgeting, here’s why it’s important to tackle this immediately and lead by example!
The Importance of Creating a Personal Budget
Teens enjoy the ability to focus on school as their parents focus on providing for themselves and their family. However, once teens start to become more independent and move towards higher education or jumpstarting their careers, understanding personal finance is key to their continued success in life.
Teaching them about how you budget for your monthly expenses, personal investments and other wants or needs gives them an example that they can use in their own lives.
That being said, it’s important to remember that your budget is going to look a lot different than their budget. So, how do you properly teach your teen about budgeting when it comes time for them to start managing their own money.
Personal Budgeting For Teens: Tips For Parents
1. Sit Down With Them And Draft Up A Budget
Teens will have vastly different financial demands than you, but that doesn’t mean that they won’t need a budget both now and moving forward.
Set aside some time to sit down with your teen and create a budget that will reflect their future earnings. For now, you can focus on expenses like car payments, insurance, entertainment, and other areas that apply to them. This will help them see how much they’re spending and how much income they have to spend.
Another great way to teach them about the importance of budgeting is to focus on future expenses. For example, you may want to create a budget that covers rent and utilities, health and dental insurance, and groceries, to name a few. This gives them a realistic overview of how much they’ll have to make moving into adulthood.
The more comprehensive the budget and the greater the strategy, the more prepared they will be to establish their own budget and work hard to cover their expenses and beyond.
2. Help Them Set Financial Goals
Budgets shouldn’t just cover monthly expenses but your financial goals as well. For example, teens may want to save up for a car, college, or even for their own place and furnishings. However, the saving can easily be missed by teens who are more focused on spending now than on their future needs.
Ask them, what do they want to save up for? How much do they have to set aside per month to reach that goal, and can they do it without it having to take away from other categories in their budget?
Understanding how to allocate their income for expenses, emergency savings, and financial goals is a major lesson that they should be learning when they use your budget as an example for their own financial activities.
3. Open Up A Savings Account and Debit Card
The tools that your teen has access to play a major role in whether or not they’ll effectively manage their income. If you haven’t already, open up their own savings account and help them get their first debit card.
With money coming in and a way to spend and save it, they can learn to manage their finances and all the lessons that come with self-management. It’s always better to tackle this earlier with your support than for them to go out on their own and have to learn proper budgeting the hard way.
Get Started With Creo Wealth
As you can see from the above, every teen should have a successful financial education before they go into the world, and this starts at home. If you’re ready to help your teen learn about personal budgeting, contact us for a simple budget planner.
Their financial future begins with you!