Posted by: Daryl & Wendy Ashby | April 15, 2011

Money Matters, a Moving Target

Budget basics for teens

Help your teen set goals, track expenses, and stay motivated to budget. For many teens, the word is right up there with “homework” and “curfew.”

But take heart. When your teen realizes that budgeting is just a way to set and achieve goals, she’ll probably be more open to it than she is to her curfew!

The fact is most teens don’t have a problem spending the money they get from gifts, allowances, or a part-time job. What they need help with is finding a comfortable balance between income and expenses. Here’s what you (and your teen) need to know.

Setting goals
Goals can be a bit of a moving target with this age group, so the first thing you want to do is help your teen sort her goals into different categories.

  • Short term: Movie night, new earrings, lunch at the mall
  • Mid term: Tickets to a concert, new tablet computer
  • Long term: College, university, or apprenticeship program, buying a car, travelling

TIP: For many teens, medium- and longer-term goals can seem impossibly far away and hard to reach. (“Why should I put money aside for a summer semester in Paris. I’m never going to have enough.”) To counter this defeatist attitude, some parents agree to subsidize purchases that have an educational component. For example, you might offer to pay for half of that summer program or half of a laptop computer if your daughter can save the other half. If she wants a television for her room, she’s on her own.

Tracking expenses
Have your teen spend one week tracking every penny:  lattes, clothing, lunch in the cafeteria, movies, music downloads (even if she uses a prepaid music card for her downloads, have her add the amount to the weekly tab), deposits to her other savings accounts.

When you’re filling it in, be sure to include the weekly portion of her monthly expenses. For example, if her cell phone plan costs $35 month, include $8.75 on her tab.

Part of this exercise is grouping her expenses into broad categories such as food and drinks, entertainment, clothing, jewellery, cosmetics and hygiene, games and music, savings, etc.

By doing this, your teen will be able to see just how much money she spends in a week and, perhaps more importantly, where she’s spending it. Chances are, she’ll be surprised by how much cash slips through her fingers, especially on the little things.

Driving the message home
Once your teen has identified what his goals are and calculated how much he spends in a week, the objective is to help him channel his money toward the things that are most important to him. 

Let him know that he doesn’t have to give up lattes altogether, but indulging once a week instead of three times could free up $10 for something more important to him.

Having an emergency fund is important for you, and for your teen
The ability to manage unexpected expenses is one of the cornerstones of financial security.

In your teen’s life, unforeseen costs might include a last-minute invitation to a concert or a great sale on some coveted item. 

The age-old motto of “be prepared” is the key here. After all, while the expenses themselves may be unpredictable, the way you cope with them is not.

To set up an emergency fund, your teen simply needs to set aside a little money in a separate savings account or a place where routine temptation won’t fritter it away. Even a few dollars a week can add up, and your teen will discover the empowering feeling that comes with being able to capitalize on an unexpected opportunity


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