Teaching Tweens and Teens How to Budget - One Effective Approach

It happened.  You’re beautiful, adorable baby just turned 13 years old.  Where did the time go?  Tweens (10 to 12-year old’s) and early teens (13 to 15-year old’s) are in the awkward stage of life where they need to begin learning about how to be independent, but they are not quite old enough to get a job with most companies.  And, the limited ones available, such as a newspaper route and babysitting, are difficult to get.  There’s only so many to go around. 

The other challenge in the tween and teen years is when kids begin to go to the movies, hang out at the mall, go to fast food places, and go do activities independently with friends or groups.  Making sure they have the cash they need can mean endless trips to the ATM.  Every day it seems like they need another $10 or $20 for some activity.  Okay, it’s not quite that bad, but it sure feels that way sometimes.  Right? 

At one point, all of our kids were at some stage of being a tween and teen in our house at the same time.  All of them were involved in some sort of activity or were doing more independent things with friends.  The “want” for cash began to get a bit out of control.  We were at a lost as to how to create structure, a balance, and opportunities for our kids without them taking on an entitlement attitude of readily available cash that they did not earn themselves.

As we struggled to figure out a way to “teach” them the value of money in a real way, not just talking about it, a friend of mine demonstrated a cool idea.  She had no idea about our desire to teach our kids how to budget in a practical way when they were barely old enough to earn money on a consistent basis.  Also, we were looking for ways for our kids to “help” with basic needs such as running to the store to get milk and bread.  If I had to run to the ATM to get cash, then I might as well run by the store, too. 

One day while my friend and I were spending time together and she was in the middle of making dinner for all of us, she realized she had forgotten to pick up a few ingredients.  Her daughter was on the way home.  She called her daughter and asked her to stop by to pick up what she needed.  Then, she did some things with her phone.  I made a comment about her daughter having enough cash.  She responded, “Oh, I just moved enough money to her debit card.”  My reaction was, “You did what?”  You see, tweens and teens (all kids, actually) can have a checking account if an adult in on the account with them.  Financial institutions now have their systems set up so money can be moved from one account to another.  That probably isn’t news to anyone.  However, have you thought about being able to transfer money from your account to your kids account?  And, no, they can’t transfer money themselves unless they are a user or account holder on your account. 

When we discovered this (it seems so obvious now), it was like the skies opened up and the sun shone brightly on us.  Okay, it wasn’t that illuminating, but it was the answer we were looking for in our current situation. 

We instituted a set allowance per month for each of our kids.  A lot of parents do this, but instead of handing it to them, we transferred it into their checking account.  We also upped their personal responsibilities such as doing their own laundry…literally.  It was a rocky road for a bit because they were used to get something (money) for nothing (few responsibilities). 

At that point, we had limited how much they received each month and they had to choose what activity was most important.  They had to budget their money.  When they ran out, that was it for the month.  Incidentally, our middle kid got creative and began to recycle his books and got cash for them.  Overall, our kids learned to go without because of the decisions they made, not because of mom and dad.  And another benefit was being able to ask our oldest to run a few errands for us.  We would reimburse him by transferring money to his account. 

Our kids haven’t always been great at following through on keeping their rooms cleaned or getting their laundry done – they’ve worn dirty clothes to activities, which was a hard but effective lesson.  We started the process when our oldest was an older teen, so it took him longer to adjust.  It hasn’t been easy at times, but we are beginning to see the rewards from the process.  Our oldest is great about budgeting his money and is conscientious not only about his money, but others as well.  Our other two kids are beginning to appreciate what we do spend on them. 

This may not be the route for many parents, but it is a way to create a controlled financial environment where tweens and teens can have a hands-on experience in budgeting money before they go off to live their adult lives or go to college.  When they run out of money for the month, they can’t run and get a credit card.  They, instead, have to learn to be content to live without until they earn their allowance for the next month.  They learn how to budget their money effectively.  They get used to having a debit card in their pocket that they have to use carefully.  They learn how to maneuver (i.e. make purchases, balance an account, create a budget, look their account up online, etc.) in a tech driven society. 

If you are interested in this approach, but need a spreadsheet to get started, take a look at the FREEBIES on the Resources tab.  There are several different types of Excel Spreadsheets available.