Tips for Parents on Teaching Your Teen to Budget and Save

Tips for Parents on Teaching Your Teen to Budget and Save

I was absolutely terrible with our finances when I was in my teens and 20s. In fact, most of my Friday paychecks were blown at the Mall of America leaving me with little to nothing come Saturday. Not even gas money. What really bums me out is that I was making about $1,000 at the age of 16…and Holister, Abercrombie and Olive Garden got more of it than I did. I went into my 20s with great credit followed quickly by insane amounts of credit card debt. My mom did a great job of teaching me a lot about life and she showed me how to balance my checkbook. On top of that, thanks to my failing grades in math class, I was gifted the opportunity to take “consumer math” which taught me how to budget, save and do my taxes. (This all sounds great…I was in good hands right?) In that class they would have us find an apartment, plan our bills and then BAM! we’d get a flat tire and have to dig into our savings to pay for it. I remember thinking, “This is so annoying. They are just trying to make this hard on us.” –Uh, no sweetie…this is called life and since you’re a senior taking math classes with freshmen, they’re just hoping you can survive life after high school. Now, as a mom raising 3 children, I didn’t want this ignorance to rub off on my kids. When our oldest got her first job at the age of 16, I stepped in. Here are my tips for parents on teaching your teen to budget and save…so they don’t end up like me circa 2010.

Tough love and good intentions 

Don’t waste any time sitting your kids down as soon as they receive their first paycheck (or sooner.) This will not be an easy talk. They will hate you; like a lot, but in the long run they are going to totally understand why you did this and probably thank you for it. I know I would have thanked my parents.

Sit your kids down and work with them to get a plan together. If they are tough as nails and don’t want any part of this, then get a plan together yourself and tell them when they are ready, they can try again to be a part of it. Remind them it’s all about them. (Everything is, right?)

Cut things in half.

When my daughter, Dezy first started bringing home her paychecks, I took half of it and put it into her savings. She was super annoyed when I told her I would take half of her money. However, I explained to her that I had blown through my money like a wild woman when I was her age and I didn’t want the same for her. This money would be put into a savings for her. Since it was summertime she was able to work a lot more which meant bigger paychecks and more time to spend money on pointless things. Also, she still didn’t have her license. Because she didn’t have any bills or payments to commit to, I wanted to make sure I started her savings right away.

We continued this method throughout the summer. Half her paychecks went into her savings and the rest she was free to blow on whatever she chose…and she did. No surprise.

More posts on making and saving money

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Teach short term savings

After a few months of allowing her to get used to living comfortably off half her paycheck, I started working with her on setting up her own Sinking Funds. You can read all about how Tom and I use our Sinking Funds here.

With Dezy, I sat down with her and we worked out a list of things she would want to save for within the next few months. We came up with the following list:

  • Christmas money
  • Car
  • Parking permit for school
  • Louisiana Trip (she went on with her grandma)

After we got her list together, we wrote down how much she wanted to save for each event. We then figured in how many months she had to save and how many paychecks she would get in that time frame. We were then able to easily figure how much money she should be setting aside per paycheck in order to reach her savings goals. You can see the worksheet we used below.

Click here to get your own Sinking Funds Chart

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After planning this out we knew she would have to set aside about $175 per paycheck. Around this time, I also started putting only 25% of her paycheck into her savings and she was usually left with something around $20 for 2 weeks. Seems pretty lame, am I right? But, in reality, she had no gas to pay for yet, no bills, and the best part? She was able to save up all the money she planned on saving for her car in only 4 months! Keep in mind, she was the one who wanted to be this aggressive with saving. Her goal was to have her own car by January, and she did it!

Stay organized

We got Dezy her own mini-file folder in order to keep her sinking funds together but separated. Here are some practical file folders you could use:

More posts on organization

Split the bill

After giving a few months to work on saving (especially if they are saving for big things, like a car) it’s time to work in the bills. If they have a car, they may either have a car payment, insurance or both. Phone payment too most likely. If you have a spouse, be sure to sit down and talk this through with them! What bills do you expect your teen to pay and which ones will you continue covering for them. Here is an example of what Tom and I decided on, and you can of course, take the time to sort through what matters to you.

Mom and Dad still pay:

  • Phone bill
  • Contacts
  • Prescriptions
  • Doctor
  • House
  • School fees
  • School clothes

Dezy pays

  • Car insurance
  • Car tabs

Be specific with your lists so that nothing is forgotten or over-looked. If your child has questions about whether or not you are going to continue helping them in a certain area, now is the time to lay it all out.

Factors to take into consideration

  • School time
  • Sports time
  • Mental health
  • Savings
  • Social life

School time

Chances are your teen is in school for the majority of their day. Make sure they have plenty of time to accomplish any homework that they have without feeling overwhelmed by an over-booked schedule.


I know some families who have kids in sports so they don’t require them to work yet. Different things work for different families and you have to make the choice whether or not your teen working is something you are going to put off or encourage early on.

Mental health

This is huge in our family. Teenagers these days struggle more than any past generation when it comes to depression and anxiety. People tend to have all sorts of different theories as to why this is, but I know in our family, it is a very real thing and we don’t take it lightly. We had to find multiple ways to create balance between school, work and social life for Dezy. At the age of 16, I don’t believe life should be all studies and earning money. Your youth, in my opinion, should also be reserved for fun and carefree (but informed) choices.


Taking the time to factor in your teen’s extra curricular activities and school time may not leave them with that many hours in a week to rack up a ton of money. That’s ok, they’re still kids after all. Is it more important for you to have them start paying their own bills or for them to begin saving?

Social life

As I said, we still expect our 16 year old to have a social life. We know she will want to go to the movies, out to eat and spend tons of time with friends so we make sure she has plenty of money to do that.

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Prepare a budget

When getting a budget together, your intentions should never be to make your kid see the harsh reality that is life, but rather help prepare them for it so hopefully life in the finance department isn’t quite as harsh.

If we chose to have Dezy save her money and pay all her bills, there most certainly wouldn’t be any left for her at the end of the month. I don’t want her to think of working in this manner. My goal is to show her the benefits of saving and being financially smart while still enjoying the fun that can be had with earning your own money.

A great starter budget:

  • 25% savings
  • 25% bills
  • 25% sinking funds
  • 25% fun money

This is still for them

If your teenager stresses about you taking 75% of their paycheck away, try working with them to demonstrate how really all of this money is for them. If they are paying the bill for their car, or their phone, that was ultimately something they wanted.

Allow them to see their savings build in the bank so they are aware of just how much money they have waiting for them. Sure they might dream of spending it on a sports car, let them have that fantasy.

Let them tally up their sinking fund money with every new paycheck. This is great when they are wanting to save up for something special (like a car, prom dress, spring break) because they can see just how close they are to reaching their goal.

More posts on budgeting

Saving and investing

Once your child has started s savings account, it might be time to look into a high yield savings account so they can gain more interest. Another option is to look into CDs. Once your child has saved a significant amount (I’d say at least $1,000, but more is always better) take them to the bank to discuss putting their funds into a CD or high yield savings account in order to gain interest on the money they’ve saved.

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Starting to invest for young adults has gotten so much easier with a wide variety of  “spare change” investment apps that are now available. I have been researching these for a while and have found Acorns to be one of the most legitimate and easiest ones available. Acorns allows you to invest by rounding up your purchases. For example, if you get gas for $28.75, Acorns will take that .25 and invest it for you. The best part is, you can always choose to invest more if you choose. After reading the reviews, it seems many people have been able to save large amounts of money and get a huge return on their savings. –Not only the 20 somethings either!

I think this step is the scariest for most people. I know it is for me. My goal for this year is to dip my foot into the investing pool and woefully I will be able to report back more to you then!

My top money and time saving recommendations

$5 Meal Plan – The $5 meal plan was created by a busy mother of 4 for other busy mother’s out there. Get access to healthy meal plans that take all the guess work out of what to make for your family!

BeFrugal – Be Frugal is an online resources for the best coupons around. In stores, online or in restaurants.

IBotta – IBotta is a totally free app that pays you $10 just for signing up. With this app you can get paid for the things you already plan on buying!

Love and Money – Online courses to help couples and family get finances together in order to stay together!

Paperless Home – The paperless home guides you step by step through how to start creating a home where all of your most important information can always be in one place and always at your finger tips!

Simplify + Planner – Abby Lawson from Just a Girl and Her Blog has a great and inexpensive planner to help you get intentionally organized. Starting a blog can be very overwhelming and getting a little organized can go a long way.

Target Debit Card – If you shop at Target as much as me, you should definitely get in on the debit card if you haven’t already. All it does is remove money from your regular checking account like a regular debit card, but saves you 5% on your purchases every time you use it!

Don’t Forget to PIN This!

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  1. Allison | 11th Jan 18

    I love these tips!!

    • | 11th Jan 18

      Thanks so much Allison!

  2. Angie | 11th Jan 18

    Great post! It is so crucial to adulthood to teach them young.

    • | 11th Jan 18

      We’re working at it!

  3. Laura @ The Mindful Mom Blographer | 11th Jan 18

    These are really great tips. Your experience in your 20s sounds EXACTLY like mine. I wish my parents would have worked with me like you are working with your daughter! We definitely plan to start super young with my son!

    • | 11th Jan 18

      It’s frustrating. There was a time I was working 3 jobs after high school…where did that money go? I remember saving $1,000 in less than a month because I had something I wanted to do….1 month and $1,000 saved…imagine if I would have stuck with that and not BLOWN that money immediately! ARGH.

  4. Marie | 11th Jan 18

    Loved this! I’m thinking it’s time we start something similar with our tween who seems to think money grows on trees.

    • | 11th Jan 18

      Ohhh I’ve been there. I don’t care if she keeps thinking I’m cruel, at least she’ll have money set aside for her when she needs it most!

  5. Melissa Javan | 11th Jan 18

    Great post. I love the tough love aspect. Your daughter will thank you in the future.

    • | 11th Jan 18

      I sure hope so!

  6. Debbie | 11th Jan 18

    I couldn’t have found this at a better time. My daughter is 16 and looking for her first job. I have pinned it so I can keep referring back to it as in two years again My other daughter will be at this stage!! Thanks!!!

  7. Logan | 13th Jan 18

    These are great tips! I’ll definitely be pinning for when I have kids. I love how you teach yours financial responsibility early! Thanks for sharing. 🙂

    • | 13th Jan 18

      Thanks so much Logan. I’m definitely trying.

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