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Educate teens on the importance creating and following a budget

The current economic environment has caused many families to reconsider their savings and budgets, with some seeing the need for drastic changes. For instance, as their high school students approach college, many families realize that belts need to be tightened in order for their savings to fully fund the upcoming college tuition, books and other expenses, in addition to rising family expenses. Whatever the cause of the belt-tightening, if used as a learning opportunity, today’s “Recession Generation” may develop responsible attitudes about finances the same way that the Great Depression Generation did.


Do be honest and open with your teen

Share the current situation, what has changed and why, and their role in the new financial plan. It doesn’t necessarily mean that they will like the changes, but at least they will understand them better. Understanding the reasons that you’re tightening the family budget belt is the first step for a teen to deal with the issue.

Do have them develop a budget based on their priorities and goals

Some teens look ahead to buying a car or financing a trip. Regardless of whether they are earning money through allowance or a part-time job, their saving for future needs or wants should be a part of their budget. This can be a direct outgrowth of early-childhood teachings on the importance of money and how saving for the future can lead to mature decisions.

Do approach the family “belt tightening” as an opportunity

This exercise can be a chance to turn teen spending into motivation for learning about budgeting, savings and sound financial management, turning their initial disappointment into a learning process.

Do partner with your teen

Make your teen a partner with a stake in the family financial enterprise. Get them to distinguish between needs and wants and then prioritize. Usually, working as a team has a major influence on their spending and saving since it affects more people than just them alone.

Do understand that for most teens, it’s not really about the money.

For teens, it’s more about what the money can get them: entertainment, clothes, electronics, and transportation. Money is just the means to an end to them. The above dos can help your teen overcome their initial sense of importance, instead encouraging them to think about others and work together so the entire family gets what they need.


Do not dictate rules and priorities

Start them with a financial journal for budgeting and record keeping. Some teens might respond well with a software program such as Quicken or Microsoft Money. Once they see their own spending habits, they can and will make their own rules.

Do not expect them to suddenly stop spending privileges that they enjoyed before

Instead of a quick change over to the new way of looking at things, they instead need to become more accountable for their expenditures and then begin to gain a sense of satisfaction from smart financial management.

Do not forget to have them establish a relationship with a bank

If you haven’t already done this at an earlier age, there is no time like the present. Have them get acquainted with the bank and bankers, set up a savings account and sign up for a student debit card.

Do not discount bribery

Just kidding. But one thing you can consider is matching their savings. After all, it worked with your 401(k) plan, right? You may want to consider matching to their long-term savings; much like your employer does for you. This will give your teen an added incentive to save, and can teach valuable lessons about saving money over the long term.

Do not neglect the math

Show your teen how they can be a millionaire by the age of 40 by saving just $250 a month starting today. Using this in conjunction with matching savings above, and your teen can start developing good money habits quickly.

Jumping cartoon

Truth-be-told: teens are adults in training. When given the opportunity, they will demonstrate responsible behavior and smart financial management. They can be motivated by their own wants and needs, however, when they begin to see the important role they play as part of the family financial picture, they will exceed your expectations.

More expert advice about Budgeting

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Keith Klein, CFP®, ChFC®, CLU®, CASL®Registered Financial Advisor

After more than 15 years as a financial service advisor, Keith Klein CFP®, ChFC®, CLU®, CASL® reached his own Turning Pointe and founded Turning Pointe Wealth Management. It had become clear that the best way for Keith to provide unbiased soluti...

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