The Basics of a Children Budget

As every parent knows, teenagers are not cheap! In a materialistic world it’s hard to keep up with the latest craze and cost of living! For every parent, it’s our desire to see our kids grow up to be self-sufficient and a contributor to society. By the age of 12, kids are becoming more independent and know what they want sooner than later. Gone are the days when big gifts arrive at Christmas and birthdays. Kids these days seem to own everything the moment they are released. How do we teach them to be financially responsible sooner rather than later?

By the time they start earning their first pay packet, many believe that it’s all their hard work so they can blow it and still come to you for more cash. This is an irresponsible behavior society has impregnated into our children’s mindset with the offer of credit cards and national debt at a record high.

Budgeting for teenagers is essential for their financial responsibility. Budgeting for teenagers is a little more complex than a 4 year old or a 10 year old as by now they have more expenses to account for. The usual allowance rule of “one dollar per age” is pretty much out the door at the same time. Most teenagers’ allowance would be in the range of $20-$50 per week. This takes into account travel cost, lunch money, sporting equipment, excursions, outing with friends, games and toys. For those who are able to drive, the cost of petrol and running cost will also be a part of the budget.

A simple excel spreadsheet is where we will need to start to draw up a kids budget. Income on top- allowance, part-time work will account for most of this on a weekly basis. Savings should be another category as its vital we teach our kids to save before they learn to spend. This is definitely very important for a kids budget. A minimum of 10% is encouraged to be saved. If they wish to save something big it may be wise to create two saving category – one that is not to be touched and another to spend later. Then it’s the all important Spending categories – transport, lunch money, excursions, sport, mobile phone, social outings, gifts, games etc.

As parents we should speak about the children budget on a regular basis to guide them in their decisions. As they get closer to adulthood the more responsibilities they will have. The wise teaching of teaching kids to be responsible for little will encourage them to be responsible when they get more. Reviewing the children budget with them will help them see where their money goes and if they are on target with goals they had set earlier in the year.

I recommend kids write down every expense they make in a book which they total and place in the appropriate category at the end of the day or week. This can help them re-think some of their expenses.

A quick way of saving a few dollars is simply bringing lunch to school. You can save over $20 in a week. Suggesting simple ideas like this can teach kids to prioritize what is more important to them and is useful when teaching about a kids budget.

When it’s Christmas or their birthday you may encourage them with their savings by matching their savings or doubling what they achieve so they can reach their goal sooner.

We need to teach budgeting for teenagers earlier in their life so they don’t put themselves at risk of living beyond their means.

What do you think about the above? You are welcome to share your comment, experiences and questions below.