This is a guest post from Jonny Pean at Finance Wand.
Are you wondering why personal budgeting is important for your teenage son or daughter? The sooner they understand the value of money, the better for them (and of course for you). It is important that they know how to be able to save money and be reasonable with income and expenditures so that they have enough for a rainy day. As a parent, it is your duty to help them understand the significance of personal budgeting. If they do not know how to take care of their finances, they may end up in debt for the rest of their lives. Knowing how to balance between your income and expenditures gives you control over your finances and helps you lead a healthy lifestyle. Being in debt is quite troublesome and people lose a lot of things over debt. If you do not want this to happen to your children, you should teach them how to maintain a proper budget.
Here is how you can help your teen daughter or son maintain a healthy personal budgeting habit:
- Explain the details: Your children should never take money for granted. It is hard earned and they should value your efforts to bring in the money. Explain to them how credit cards work, as well as giving them training on how bank accounts work. This way they will know how where the money comes from and how it is used. Do not forget to talk about the payments as well as service charges.
- Allowance: Let your children feel financially independent and be responsible for themselves by giving them an allowance. This is a very important step in personal budgeting where you teach them to actually handle cash. You may start by giving them a weekly allowance, and remember, you must be firm about their spending habits. Whatever money you give them, they must be able to stick to that budget alone. This will be a good personal budgeting exercise that you can practice. Maybe you could start with a weekly allowance and then gradually move to a bigger monthly allowance.
- Make an agreement: Keep things clear between you and the kids regarding what expenses you will bear for them and what is their responsibility once they are getting an allowance. This should make them responsible enough and they should have a sense of earning that allowance you give them.
- Teach about budgets: Tell your child(ren) how important personal budgeting is. You can help them by making a list of the month’s expenses and the due dates. You may sit down with him/her and explain how the monthly personal budgeting system should be followed and how it should be managed to meet their expenses.
- Get practical: The best way to help them with really getting to handle their finances is to have them open a bank account. Since most teens are impulsive, not having cash may help them realize the value of sticking to a budget. However, in this personal budgeting exercise, you have to be really tough when they are going through a hard time and ask you for money.
- Set goals: Ask your teen children to save some money from their monthly allowance. This will teach them to put aside money for savings purposes.