This is a guest post from Grant Baldwin, the author of Reality Check, a book about helping students transition into the real world.  His new website, BrokePiggy.com, answers questions from teenagers about personal finance, savings, and all things money.

This series “12 Things Every Teenager Needs To Know About Money (And How To Teach Them)” is a community blog experience.  This post is only one of the 12 points in the series so to view the other 11, please visit the list of links below.

Living On A Budget Isn’t An Option

Ah, it’s time to discuss the dreaded ‘B’ word.  Not that ‘B’ word you filthy animal…get your head out of the gutter!

In order to be successful with money, you really need to have a budget.  It becomes a roadmap to guide your decision-making and your spending habits with your finances.

But I’m sure like most people, you and your teenager probably aren’t math nerds who stay up late into the night coming up with new ways to solve expert-level Sudoku puzzles.

I don’t do that either just so you know!

But whether you’re a math whiz or you still count on your fingers and toes, you need a budget. Most teenagers are more like free spirits who prefer not to live in the confines of a budget (I wonder if they learned that from their parents…hmmm…I’m just saying).  So how do you teach a teenager to budget?  Let me help young grasshopper…

·     Start Now With What You Got – Budgets aren’t just for millionaires or people who make over minimum wage.  Budgets are for anybody and everybody who has ever had a dollar (that would be all of us in case you missed it!).  Same with the concept of giving, if you don’t budget when you make $100 per week, you’ll never budget when you make $10,000 per week (don’t forget about me when you do).  I know expenses are limited and income is small, but establish that habit now to make a budget.

·     Do It On Paper – I like gadgets and gizmos. And oddly enough, I kind of like spreadsheets.  Spreadsheets are great for creating budgets, but don’t start off there.  Start with good ole’ fashioned pencil and paper. Why?  Something changes when you have to do the math by hand and see where your money is going.  It forces you to really think it all through and make better decisions with your finances.

·     Use The Envelope System – If you’re unfamiliar with this idea, basically the concept is to pay for as much as possible with cash.  After you’ve helped your teenager to establish their budget, find categories that can be paid for in cash.  Things like gas, eating out, movies, etc.  Make an envelope for each of those categories and put the budgeted amount of cash in each.  Then pay for items from their respected categories out of these envelopes. Paying with cash is tougher than swiping a piece of plastic and will also help your child to better manage their money, because when that envelope is empty, their spending is done.
Here are the rest of the articles in the “12 Things Every Teenager Needs To Know About Money (And How To Teach Them)” series:

This is a guest post from Grant Baldwin, the author of Reality Check, a book about helping students transition into the real world.  His new website, BrokePiggy.com, answers questions from teenagers about personal finance, savings, and all things money.

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4 Comments to “12 Things Every Teenager Needs To Know About Money (And How To Teach Them)”

  1. So true! I wish I knew this when I was a teen. Budgets aren’t just for the frugal.

    I’m really enjoying this series. Check out my Q&A with BrokePiggy’s Grant Baldwin (not officially part of the series, but if you’re interested in his story and why he started BrokePiggy, check it out) http://www.hereverycentcounts......money.html

  2. I really wish I had budgeted when I was a teenager. Money I had was for spending, period. I have a savings account, but I didn’t think of it as “separate money” or set any goals for it. Goals are key!

  3. Thanks for your involvement in this series Michael!

  4. students with credit cards should be more responsible with their spending habit.They have to set priorities and avoid spending on unnecessary stuff. They have to learn managing their finances well to avoid debt problems in the future.

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