Budgeting Tips for Teens
Updated: Oct 15, 2020
5 tips to make budgeting easier and more effective
When we talk with young adults about money, it helps to put it in terms they can relate with and understand.
If money were a sport, we like to think of Earning money like Offense, or putting points on the board --- and Spending like Defense, or protecting your money from all the temptations and emergencies.
Your Budgeting is like the head coach, because you are making a plan for each month (game) for how you will spend the money you earn.
Just like coaching in sports, there are 2 parts to Budgeting:
1. You make a plan for each month
2. You have to keep track and adjust
Here are Budgeting Tips to help you do just that!
List of the top 5 Budgeting Tips for Teens
1. Create your Monthly Game Plan
This is usually easier because many of our earnings and expenses are recurring, or repeating. If they are not, use realistic averages.
First, write down all your expected earnings for the month.
Second, write down all of your expected expenses for the month.
Third, assign target numbers for where you would like the rest to go. For example, $500 for saving, $200 for entertainment, $200 for paying down debt etc...
What does winning the game look like for you this month? Be real with yourself.
2. Keep track of transactions that haven't happened yet, but you know will happen
Just because your bank account says one thing, doesn't mean that's actually what you have to spend!
If your account says $1,000, but you know you still owe $600 rent for the month, then you really only have $400 to spend. If you said yes to a vacation weekend away in New York thinking you had $1,000 to spend, you would be in trouble!
If you're going to keep track of anything, keep a constant tab of What You Still Owe minus What You Are Still Owed.
Then add or subtract that total from your bank account at any given time, and that's what you really have to spend for the month!
If you do this once a week, it only takes about 15 minutes.
3. Show them your paycheck in cash, and where it all goes
A powerful exercise to do with teens is to take out a whole paycheck in cash. Yes it's a little scary, but that's where the power comes in.
Then go through your monthly bills and expenses to show them how much is left. We guarantee it will surprise them!
Money is so digital now, which means we lose the physical connection with it. But when a kid sees how much of that stack of cash actually goes into monthly expenses, they'll get the point.
4. Tie saving to a big and exciting goal
My friend, who said she never really needed budgeting that badly before, recently came to me for budgeting help when she decided to start saving for a graduate school program in Italy.
There's nothing to help you cut back and save more like an awesome and inspiring dream goal!
Keep that goal in front of you. Every time you feel yourself getting lazy, or feeling extra tempted to spend extra, remind yourself of that big goal, and take peace in knowing that a no for this latte, becomes a yes for that trip to Italy.
5. Keep your big expenses down!
This is hard, but huge!
Just 3 big decisions can make up over 50% of your monthly spending!