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Teaching Teens to Budget

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I was talking with a couple friends recently about back-to-school shopping. Our kids are teenagers now, and care more about brand names and labels than they used to in the past. The problem, of course, is the price tags on some of these “name brand” items can be astronomical and impractical for most budgets.

One friend said how she handles these requests is by setting a limit of what she’ll provide for a given item (e.g., say $50 for a pair of shoes), and if her teen wants something that goes above the limit,  they have to pay for the difference out of their own savings. Makes them look twice at those $150 Nikes and really think about how many babysitting hours it would take to pay the difference to consider whether the cost is worth it.

I liked that idea – setting a reasonable limit for an item and telling my teens they can choose to purchase a more expensive version if they want to be responsible for paying the difference.

Then another friend chimed in with a unique approach. 

She said starting her senior year of high school, her Dad gave her a biweekly “paycheck” for her to budget for all of her needs and wants. Prior to starting this, her Dad had calculated all the costs associated with raising his daughter. This includes:

  • Apparel
  • Sports registration fees
  • Car insurance and gasoline
  • Gifts for friend’s birthdays
  • Just-for-fun treats (e.g., ice cream, Starbucks, boba)
  • School events and extracurriculars (e.g., school dances, attire, school supplies, marching band, etc.)
  • phone bill
  • Beauty supplies (haircare, makeup, etc.)
  • Entertainment and fun (movies, mall, dinner with friends, etc.)

Her dad did the math to figure out the average spent per month and gave a biweekly paycheck so she could start to learn about budgeting before she left the house. There were some things her parents still covered themselves (e.g., she had a bad sports injury that year and had to have surgery – obviously her parents covered all medical expenses). They also continued to still give her gifts for Christmas and her birthday outside of this budget.

In their case, my friend’s dad continued this practice through her college years. He gave her a set amount and that was it. If she ran out of money before payday, she had to figure it out. And if she budgeted and saved wisely, she’d have extra funds she could use for entertainment or fun.

I love this idea! While I think my newly-13 year olds are a bit young to be given that level of responsibility, I’d like to keep this tucked in the back of my mind for the future. What a great gift to be able to provide – teaching your child financial independence before they really go out on their own. 

For my friend, she was a real proponent of starting while the teen is still living at home. That way if they run out of money, they still have access to food and they’re not going to end up in the dark (housing and utilities are covered by the parents). It’s a low-stakes risk with the potential of high rewards when your child learns how to weigh decisions about costs, and how to stick to a budget.

Right now, I give my girls a small monthly allowance ($25/each) and I make them use their own money if they want something special that I’m not planning to buy. An example is Starbucks (very popular with the teens in this area right now). Occasionally we’ll drive through a Starbucks and I offer to buy us all something. But if the girls want to take a special trip to Starbucks that I wasn’t planning to do, then they’ll have to use their own money to buy themselves a treat. This works great for now. 

That said, I do like BOTH of my friends’ approaches to budgeting with kids. I plan to implement my first friend’s approach, where her teen pays the difference in price for an item that is more costly than she agrees to spend. And maybe in a few years I may adopt an approach similar to my second friend, whose dad paid out a biweekly “paycheck” so she could learn to budget more broadly.

 

What do/did you do with your teens? Or what advice would you offer to help teach teens budgeting basics in an age-appropriate way?



Hawaii Aftermath – Budget and Travel Options

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We’re officially back from Hawaii!

And what an amazing trip it was!

Please excuse the picture of the girls’ backs to the camera. They’re teenagers now (13!) and are getting picker about what they do and don’t want shared on the internet! I’m also feeling more protective as they are growing, thus the back-of-the-head image. 🙂

It was a doozy of a trip! Even more expensive than I had imagined (and I’d expected expensive but – yikes!) We ended up about $1,000 over budget, which puts us into the “red” for our travel spending this year. We had enough in our travel savings to cover it, but we’ll need to increase savings to cover the over-spending. Or, alternatively, I had about $1,000 earmarked for some type of fun experience over Labor Day and/or Fall Break and I could cancel that to cover the overage.

Budgeting

To back up for those who may be newer readers, in my monthly budget, I have a line item specifically for travel savings. I save monthly toward travel. Then when we go on vacation, we spend from our savings. It’s great to have trips essentially “paid for” before they happen and not have to worry about going into credit card debt, which is something that definitely would have happened to the me of 10 years ago!

At the beginning of a year (or, sometimes even further out than that), I create a  draft travel itinerary for the following year. I fill it in with things I know we will definitely do, like an annual trip to Austin to see family, along with estimated costs (usually about $1500 for an Austin trip). I also leave room for little mini weekend trips or staycations. Think $500 or less. And then for just the past couple of years, we’ve had one bigger vacation. This year was Hawaii. Last year was Italy.

I’m a planner, so I plan this all out in advance so I have an estimated annual travel budget ahead of time, and I break that down into monthly savings. Over time, I’ve gotten pretty good at estimating costs. I know exactly how much a weekend in Sedona costs, and how much cheaper it is to go camping in the mountains than it is to do a staycation at a resort in Scottsdale. All this to say, I’m usually pretty spot-on with planning out prices for our travels.

Hawaii Costs

Hawaii threw a wrench in things. And to be fair, I did pretty good with estimating most of our costs. I knew how much to expect for lodging, transportation, and activities/excursions. The thing that really got me…..the food!

Food was much, much higher than I’d anticipated. I am sure it can be done cheaper if staying in an Air B&B and cooking at home. We stayed at resorts, however. And while I loved the experience of walking outside and being on the beach and having all the amenities at our fingertips, I did not love the price of food! Our resort charged a flat rate of $50/person for breakfast. I’m not a big breakfast eater, so that $50 for my plate was essentially for a cup of fruit and some yogurt. We got smarter – skipping breakfast or grabbing a box of bars from a store or eating off-site – but any way you slice it, the food was outrageously priced.

It’s okay. Lesson learned. And like I said, we had the money available in savings so although this puts us over our annual travel budget, it’s not like we went into debt for the experience. It’s more about deciding what to do from here.

Budget

While I had originally earmarked about $1,000 between Labor Day Weekend and Fall Break 2025 for some sort of fun excursion (these are like the little $500 weekend quick trips I mentioned above), I had nothing specific picked out. I was thinking maybe going to Prescott to kayak and hike. Or maybe we’d try to see the Hoover Dam and hit the Arizona Hot Springs. Then again, maybe we’d jaunt over to Albuquerque where my brother-in-law lives, or go back to El Paso for a third time this year – craving all the family time we can get!

The point is, I had some money earmarked, but no specific plans had taken root. I could just decide to stick close to home and save that $1,000 so we aren’t over-budget anymore. Or I could slightly increase our savings for the remainder of the year to make budget and still plan a quick trip or two with the kids over their school break(s).

Shared Custody

One last consideration isn’t about the money aspect….it’s about time. Time that I have to share with another person. I’m not lucky enough to get my girls for every school holiday. I have to share custody with their Dad. Meaning I only have them every-other-year for Fall Break, Spring Break, Labor Day, Thanksgiving Break, etc. etc. etc.

This year I get the girls for Labor Day and Fall Break. Next year, I won’t.

That makes me want to do something fun all-the-more. Just knowing I only get 50% of those school holidays. The girls are 13 now. The next time I have them for Fall Break they’ll be 15. Then 17. Then they’re gone!

Maybe that seems dramatic. But life is so short and the kids are just growing at such warp speed lately! I don’t want to waste a break just sitting around doing nothing. What if, by the time they’re 15, they don’t even want to do a family trip? How could I not go this year? I want to make the most memories possible!

Balance

But then I temper myself and – come on – in my most recent post I gave myself a C+ because I’ve been traveling too much. I mentioned wanting to stay closer to home for the remainder of the year. I want stillness and grounding. It’s no surprise to those who’ve been reading awhile that I’ve really been craving peace and balance. This has been a little hidden theme in my writing for the past year-ish.

And at the same time I want to cultivate memories and collect new experiences. The two desires seem at odds and I’m not quite sure what to do. Feels like maybe a topic for therapy, but why not invite in your opinions as well?

I’d love to hear your thoughts and input of whether you would do less (one of my 2025 goals, to be fair) OR if you’d make the memories (and increase savings to cover the costs)?

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