One of the most powerful things to be able to do is to track where your money goes, and that starts with budgeting. Before your teen leaves home, they should know how to create a budget, how to track spending, and how to save for the future. While budgeting may seem like a hassle to some teens, shows that young people who have good financial habits early-on often grow up to be financially responsible adults.
Create a Money List – Sit down with your teen and create a list of everything they consume regularly. Aliche says that money lists allow young people get a physical picture of their money and the ins and outs of their spending habits. At the top of the money list, have them write down their monthly income.
Next, go through the list and write down how much they spend on their expenses which can include their bills, food, entertainment, clothes, and school supplies.
Finally, have them add up all of the items on the list and subtract it from their available resources and then they will have an idea of how much they have left over to spend on other stuff or better yet, save!
Once they have compiled this list and understand what each expense costs, they will be able to plan their spending. This can be done by writing it down in a notebook or by using a spreadsheet, such as Microsoft Excel or Google Sheets.
From there you can continue the conversation about the importance of budgeting. Here are a few budgeting basics you can share with them.