Financially Fit Friday by Linda Lingo/Life Changes: Equipping Your Financially Fit Teen
Last week I talked about how you as a parent or grandparent can prepare for the financial cost of college or education expenses beyond high school. This week I’m going to discuss how to equip your teen to be financially prepared for life on their own.
The best advice I was given years ago, was to make your teen responsible for their own budget while still in high school. For example, when they are high school freshman, give them an allowance of $50/month. They are responsible for specific weekly chores to earn this allowance, such as vacuuming, or dusting, or mowing. You get the idea. The only requirements on the money are as follows: 10% to long term (big ticket) savings; 10% charity of their choice; 80% theirs to spend. They are responsible for buying anything “extra” like that pair of expensive jeans they just have to have, or expensive tennis shoes, or going to the movies with friends. This teaches them to save for the big items they “have to have”. Sometimes, it turns out, that item isn’t so important a couple months later, and they don’t even buy it. This teaches them to save before spending, and distinguish between their NEEDS and WANTS. It’s budgeting 101: Budget for your needs and prioritize your wants.
Each year step up the allowance by $50/month until their senior year they are receiving $200/month and they are paying for most of their expenses. Every family will do their own negotiating on what is included and what the parents will pay for. With my daughter, she was paying for all her clothes, entertainment, personal care. I agreed to pay for car expenses and phone. She learned that it wasn’t wise to spend all of her money in the first week or two of the month, because those last couple weeks weren’t much fun with no money!
Along with this budgeting I recommend opening a checking account with your teen their senior year so they get used to using a debit card and balancing their bank statement. Many banks offer student checking accounts. I can personally recommend www.usbank.com as they have one of the cheapest student checking accounts. These budgeting skills are not taught in most of our public schools, so we as parents have to teach our kids these basic money management techniques.
This is a great way to teach your kids how to manage money before they are out on their own whether at college or getting their first apartment and working. Let’s coach our kids to be Financially Fit Teens!
Empowering Women to Embrace Their Wealth