5 Budgeting Tips Every Teen Should Know

Teens must learn about finances before they move away from home. For the most part, adulthood relies on proper money management, as well as a thorough knowledge of salaries and expenses. If you want to teach your child how to budget correctly, it’s necessary to take a look at a few distinct and key points.

Here are five tips that every teen should know:

1. Learn About Take-Home Pay

When your kid earns their first paycheck, they may notice a substantial difference from what they expected! Due to taxes, as well as voluntary deductions, such as health insurance, their take-home salary likely won’t match their promised hourly wage. They could also make tips that vary throughout each shift. Before you build a budget, it’s necessary to learn about their net income, which considers these factors.

2. Research Various Models

Many budget systems emphasize separate needs. For instance, teens don’t usually take on monthly expenses like rent or utilities. Many popular models address those responsibilities, so they won’t be relevant – at least not currently. 

Take time to research different budgets so that you can choose the best option for your teen. For instance, with the 50/30/20 structure, you put 50% of your income toward necessities – such as car payments – 30% toward wants and the remainder in savings.

3. Differentiate Between Priorities

As your teen grows older, they’ll face many crucial decisions. When they start to make their own money, it’s easy to spend too much on games or clothes. It’s necessary to instill the idea that priorities matter, especially when it comes to finances. Do your best to talk about needs and wants as separate entities.

Food works as a terrific example. It’s a necessity, as we need to buy groceries – but takeout doesn’t fall into that category. Try to discuss the variations between all expenses so that your teen understands.

4. Establish Set Goals

Every successful budget needs a few set goals. With the correct techniques, you can save up to make substantial purchases. Ask your teen to break down each objective into three intentional categories — short-term, mid-term and long-term. The first group could include a laptop, while the other two consider more in-depth targets, like a car.

Of course, it’s crucial to learn how to follow through, as well. If you maintain a positive outlook and stick to specific deadlines, it’ll be easy to reach these goals.

5. Consider Helpful Apps

In the past, everyone had to use a pen and paper to manage their expenses properly. These days, we can use technology to take a closer look. It’s a lot easier to make good decisions when you can see your bank accounts and spending habits together. Plus, teens use their cell phones regularly, so a budget app won’t be too difficult to handle.

If your child doesn’t want to commit to an app, you could create a spreadsheet instead. Consider Google Spreadsheets so that they can access it anywhere.

Try These Budgeting Tricks for a Bright Future

Every teen should learn how to manage their finances before they become adults. Try these tricks to help your kids budget accurately.