![]() Planning for this in their budget now helps prepare teens for the inevitable day when they’re paying fixed expenses to live on their own or insure their car. In the shortest and simplest of terms, you want kids to understand that a fixed cost is a particular amount of money for a specific good or service where you know the amount and date due in advance. Things like extracurricular activities, a monthly cellphone payment, or buying lunch at the mall a couple of times a week can function fantastically as ways to differentiate fixed from variable expenses. ![]() “What normal kid has fixed and variable expenses,” you ask? While your tween or teen isn’t paying off a mortgage, they’ll likely have fixed and variable costs they need to cover. The point is that money needs to come in before it goes out, and your child needs a fixed dollar amount they can build their budget around. No matter how old your kiddo is, giving your kids an allowance is a good strategy to provide them with a regular “income.” Some experts say the child’s age should equal the dollars per week, but crunch the numbers using our allowance calculator and figure out what works best for your family. If you want your kids or teenagers to learn how to budget money, one way to start is to give them some cash to practise with. This is what learning about money is like when you don’t have any money: purely theoretical and not particularly helpful. Imagine you wanted to learn to play basketball, but had no ball to bounce and no hoop to shoot into. (Will their allowance cover it?) As kids get older, they can save up for something bigger-like a new gaming station-and figure out how to save money for it.īy learning how to budget at a young age, kids will grow into teens, and then adults, who understand how to save money and have control over their personal finances. The biggest benefit of having a personal budget is that if they plan correctly, they’ll always have money for the things they need, and hopefully some left over to buy the things they want.Īnd while you might not rope a young child into sitting through creating a budget for your household expenses, it’s still crucial for them to learn how much things cost (say, a coveted toy), and if they have enough money to pay for it. And teaching kids and teens to budget will help them gain money-management skills that will serve them well into adulthood. But having a budget in place will give them a plan for how to spend and save their money. Then, before they know it, they’ve blown all their dough and can’t afford that data plan they’ve been trying to save for. There’s temptation for your teen to spend money around every corner-a fancy coffee with friends here, a trendy new shirt there, and yet another meal out for a pal’s birthday celebration. Why is it important to create a budget as a teenager?
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