Teaching Teenagers Part 2

By Francisco J. Colayco, Ph.D

When teens start working, it would be a good time to start giving them some responsibility in helping out in the family budget. As much as possible, part of their earnings should be used to cover some of the regular monthly expenses of the family, such as car payment, power and light and other family based expenses. Here are some things you might want to discuss with your teens when they start to earn their own income:

Agree on what kind of part-time jobs are acceptable and safe for their age.
Agree on what their earnings should be used for. They could help out with car insurance or clothing expenses.
Go through the concept of paying oneself first. Encourage your teens to deposit a portion of their income in a savings or investment account before spending any of it.

Making a budget: Spending less than what is earned.

Developing a written spending plan or budget can help teens learn how to balance money inflow and outflow. To develop a spending plan, teens can start by listing all sources of regular income (e.g., an allowance, gifts or earnings from a part-time job). Next, they can list regular expenses that they pay for. If after subtracting the total expenses from the total income there won't be enough income to meet expenses, as a parent, you can help them come up with a plan for making up the shortfall. Teens should have a clear appreciation of the real financial condition of the family. They should be allowed to take part in discussing family finances. More often than not, they will even come up with solutions to overcome the family's financial issues or difficulties.

To encourage Teens to budget:

It is better to give a monthly, rather than weekly, allowance
Remind them that they must keep track of what is being spent because it should last for the whole month.
Help them plan expenses and stop buying on impulse. Show them how to compare prices or wait for an item to go on sale to save them money. But, teach them not to buy items even if these are on sale if it is not in their budget. Show them how to save money by buying generic brands or shopping at thrift shops. Practice them on computing unit prices so they better understand what they are getting for their money.
Teach them how to categorize expenses as either needs (they cannot live without) or wants (not really necessary). They might not even know that they are spending on unnecessary thing
Suggest ways to earn more money or cut back on expenses (e.g., rent a DVD to watch with friends rather than go to the movies; make popcorn at home rather than buying from the popcorn stand; visit the malls once a month instead of two or three times a month, etc.).
Allow teens to experience actual money mistakes and they will become much more responsible persons. When the amounts are not big anyway, avoid the thinking that &ldquothey should not make the same mistakes as you did“.
Teens should know though that their parents are always ready to give information, support, and advice. This means that parents should keep themselves also informed on financial literacy.