8 Tips for the Parents to Help Their Teenage Child with Budgeting
Financial education doesn’t require a minimum age to start. You can help your children start early in their teen to learn about savings and budgeting. It will help them in the long term while trying to manage the significant expenses later in life.
They may find budgeting unnecessary because there is no pressure of saving money for some financial goals. Unlike adults, teenagers can live a lifestyle where every penny is spent before their next allowance date. Many chose to work for additional income only to spend more, not save for the future.
Therefore, it is essential to pass some financial wisdom to your kid and help them create a budget. These lessons of financial education will remain with them during tough times. Here are some tips for the parents to help their teenage kid create a budget and show some responsibility with money.
- Know the Income
The first step towards creating a budget is to know the exact income for a period. Generally, the budget is created for the whole month that leaves the income period to a month. It should include the allowance from parents and money from the side hustle.
Teenagers may not have a fixed income under a signed agreement with their parents. Therefore, ask them to use the small amount among the income variation each month. It will help them create a budget immune to the variation in the income.
- Set Financial Goals
Budgeting is a lifelong practice to remain on the stable side of finances. It requires consistent efforts to return an increase in savings with the same income. Even adults lose motivation if there is no visible progress or achievement.
Therefore, ask your child to have some financial goal to save money with a purpose. They can use it for vacation, education, side-hustle, or high-end gadget. For financial emergency, they can apply for bad credit loans in Ireland and create a budget to repay them.
- Select the Right Bank
Selecting the right bank to open a savings account can help with the transactions and some increased savings. The teenagers are not aware of the financial terms and the hidden lines in the contracts. Therefore, it is your responsibility to help them find the right bank.
You don’t have to impose your decision as it may affect the relationship. They may not feel comfortable while asking for financial suggestions from you. Therefore, share the opinion with the pros and cons of each bank and let them decide.
- Create Categories for Budget
Categories in budgets will help to keep track of the spending on different expenses. Your kid may not have the correct definition of categories to create a detailed budget. This may lead to unnecessary costs that often derail the budget.
Ask them to enlist the expenses in a single column and allocate categories to them. In the end, they should also divide the costs based on need and wants. Ask them to cut the expenses in the want column to save money for the financial goals.
- Guide Them in Investment
An investment-oriented mind is built with experience and guidance from experts. A teenager may not have access to some financial guru to help them with the savings. Therefore, you can guide them in investing their money to increase their savings over time.
You can use their savings to buy gold or share from the stock market. Make sure they understand the risk associated with the investment before taking any money. They may want to invest in their side hustle to turn it into a small business.
- Track the Spending
Expense tracking is essential to remain on the budget. You can ask them to install an android application to keep track of their spending. It will also remind them if they are about to cross the allocated amount.
Parents use these applications to keep track of their children’s spending. It may seem a little intrusive to their personal space. Therefore, take their permission before trying to keep track of their every purchase.
- Increase Income
You can either reduce the spending to achieve the financial goal or increase the income with a side hustle. It is okay to let your kid learn the value of money by earning it the hard way. They can start with a part-time job in some store or company to make money.
You should let them explore different line of work to find their passion. They may require some guidance now and then to deal with the problems at work. Without you and a direct lender, they may not find where to get a loan in Ireland with bad credit.
- Learn from Mistakes
They will make mistakes while trying to follow a budget for the first time. Even the budget will require updates based on their spending habits and requirements. It is vital to not dwell on those failures and learn from them.
To sum up, your kid will take some time to learn about money management. Teenage is the right time to start financial education with some serious goals. They will reap the benefits in the future while trying to manage their expenses on a limited salary with a long list of financial goals.