By the time they’re teenagers, most kids begin tugging hard at their parental leashes that hold them to childhood. They want to be treated as adults, but in many cases lack the fundamental life skills that will enable them to function as adults \u2014 skills like budgeting. You can make a budget for them, of course, but financial blogger Dave Ramsey suggests that taking a purely instructional approach may backfire. Instead, let your teenager take as much control as possible while offering a little \u2014 or a lot \u2014 of guidance.<\/p>\n\n\n\n
Set Savings Goals<\/strong><\/p>\n\n\n\n Dangle something out there on a horizon that’s reasonably within striking distance. Ask your teen what big ticket item he\u2019d like to call his own in a year\u2019s time, like his first car. Then pinpoint the cost of the dream once you\u2019ve identified it.<\/p>\n\n\n\n Don\u2019t tell your teenager what you think a used car will cost \u2014 let him do the research and see for himself. Then divide the cost by the number of months between now and his target date so he can begin saving.<\/p>\n\n\n\n Where\u2019s the Money Going?<\/strong><\/p>\n\n\n\n Identify your teen\u2019s spending habits. Did he stop somewhere for a snack after school today? If he\u2019s already driving, did he put gas in the car? Get a handle on his discretionary spending and put a monthly or weekly number to it. Then add this amount to any regular bills you expect him to pay from his own funds.<\/p>\n\n\n\n \u201cIt’s a good idea to have him budget for things that you would normally pay for yourself,\u201d says Luis F. Rosa, CFP, EA with Haydel, Biel & Associates in Pasadena, California. \u201cSay you typically spend $200 on school supplies. You can give him an additional $20 in his allowance for the 10 weeks leading up to the beginning of the school year so he can save the $200 on his own. If he spends $50 of that money on something else, perhaps he won’t have enough left to get that cool new book bag.\u201d<\/p>\n\n\n\n Funding the Budget<\/strong><\/p>\n\n\n\n Next tally up your teen\u2019s income from all sources, such as an allowance you give him or wages from an after-school job. Let him control that money.<\/p>\n\n\n\n \u201cIf you’re giving him a weekly allowance, don’t hold the money for him and give it to him as he needs it during the week,\u201d Rosa says. \u201cInstead, give it to him all at once and stick to your guns! If he\u2019s spent his whole allowance by the middle of the week, don\u2019t give him more until you’re due to give him his allowance again. Next time, he’ll think twice before spending the entire allowance all at once.\u201d<\/p>\n\n\n\n The Bottom Line<\/strong><\/p>\n\n\n\n Your teen\u2019s expenses, plus the amount he\u2019s decided on for savings, should be less than the money he has coming in each month from all sources. Let him decide what he wants to do with any surplus \u2014 that’s his reward.<\/p>\n\n\n\n Of course, there\u2019s also the possibility that his expenses and savings will exceed his income. If he\u2019s not already working, you may want to suggest he get a part-time job. Maybe he can take on more responsibility around the house, and you’ll bump up your financial contribution accordingly.<\/p>\n\n\n\n