Kids And Finances

Teaching A Teenager How To Budget

teaching teens to budget, budgeting tips for teens, parenting tips for teens

My son recently entered the workforce with his first part-time job. Last weekend he got his first full paycheck, and I could see the excitement in his eyes. He thought he was swimming in money, and relative to any other time in his life he was right.

I came home from work to find that he and a couple of friends had ordered a delivery pizza. After his friends left I found that he hadn’t asked his friends to pitch in to pay for the food. He said it wasn’t that expensive, plus he had plenty of money.

That last phrase made alarm bells go off in my head. My son needed a budget.

We agreed that he could have his first two paychecks for whatever he wanted. I know he had been eyeing some upgrades for his computer, and I wanted him to also really enjoy the fruits of his labor. After that, he would be responsible to pay some bills. He would also be required put money into his savings account.

We sat down to have a budget lesson, it was time to introduce him to the envelope method. I got two envelopes, writing the word “Insurance” on one, and “Gas” on the other.

  1. Our car insurance increased by $60 a month when he got his license. From each paycheck he is to take $30 in cash, and put it in the envelope labeled Insurance. Our insurance payment is withdrawn automatically from our account on the 8th of each month. Therefore, on the 8th of each month he is to give me $60 in cash. (You may also want to check cheap auto insurance for college students)
  2. The bill to fill the gas tank of the car he drives is currently about $35. From each paycheck, he is to take $35 in cash, and put it in the Gas envelope. When the gas tank is empty, he will take cash from the Gas envelope and fill up the car. One tank of gas for every two weeks is more than enough for the amount of driving he’s been doing. But, if for some reason he needs to put more gas in the car, that will have to come from his spending money.
  3. After putting money in each of the envelopes, half of the remaining money from his paycheck must be transferred to his savings account.

The money left over, is his to do with as he pleases.

We reviewed the process he needs to follow with each paycheck:

  • Pay Bills
  • Pay Self (Savings)
  • Discretionary Funds

Even though it’s just a part-time job and his bills are very low, his simplistic budget follows the same budget template that can result in any family being successful in managing their money. If I can get this process ingrained in his brain from the start of his first job, the more likely it is that he will follow it as an adult.

Finally, if you need some resources teaching your teen to budget, pick up a copy of The Complete Guide to Personal Finance for Teenagers and College Students. Its got something like 4 of 5 starts on and has a ton of good worksheets and other tools which can help educate your teen. At under 20 bucks its good deal so get a copy today if you need a hand getting your kid financially educated.


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Brock Kernin


  • This is a great way to get a kid started on a budget. It is amazing how “rich” they feel once they are earning their own money. It’s also a good warning for parents whose kids will be getting their first jobs this summer. If you set up a budget NOW, before they are bringing in a paycheck, they’ll get used to the idea that not all money is for spending.

    Other categories that many parents ask their kids to pay for when they get their first job are cell phone, clothing, activities, food away from home and shoes; after all, these are all things they’ll be paying for themselves within a few short years.

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