When kids get their first job, they dream of all the things they can buy. Reality sort of hits them with the first check and the huge chunk taken out for taxes. Teaching them to budget won’t be easy but is vital to teaching them how to be financially responsible in there future and not begging mom and dad for money every time they talk to you. If you have already included them on the family budget, great! If you haven’t, no worries…this is the time to start the conversation.
They Should Pay For Some Stuff
When kids start working, they don’t make a whole lot of money. However, it is important for them to pay some of their own bills. I personally started with the cell phone. They could remain on my account, but they had to pay me their share of the monthly bill. If they wanted a new phone, they would have to buy it. What this lead to was my child shopping around and settling for a pre-paid phone that saved her a lot of money each month. She saved and got the phone she wanted. Because of her choices, she is more careful with her phone because she knows that she will be the one replacing it, not Mom. Remember, this is good parenting! As they gain experience working, you slowly tack on things they can pay for (car insurance) and what they want to save for (emergency fund, car, tickets to a rock concert, or a camping trip).
Remind Them About Reality
Everyone does it. They think they have financial freedom and they can enjoy all the things they ever wanted. The budget you and your child create must be realistic. Planning an emergency fund is good practice that they can carry throughout their life. It also means if they go without a job for a little bit, they can still pay for their cell phone and insurance. Clothes, shoes, hobbies, gift giving, holidays, and anything else they want should be on their budget!
Give Them Rewards
While you are teaching them how to budget and follow their budget, rewarding them on occasion is a great way to be their cheerleader. If they have successfully stuck to the budget for three months, maybe pay their cell phone bill for the month or take care of their insurance. They can then put half of what they would’ve spent into savings and the other half they can splurge on a shopping trip or whatever else they had their eye on.
Check In Often
In the beginning, you will want to check in with your teen often. I chose to do it every paycheck for the first six months. We would sit down, go over the paystub, and talk about how much to put where based on what my daughter thought was important. I never had to really tell her where to put it, she figured it out pretty well. I praised her every week and if she made a mistake, we talked about how to avoid that in the future. I never chastised my child for making a mistake, I always reminded her that it was normal and focused on fixing it!