For many teens, the idea of budgeting is a bit ambiguous. Most students understand that budgeting is a good idea. However, budgeting for teens isn’t something that’s taught in most high schools.

Plus, budgeting is one of many things that parents forget to teach their college-bound kids. Often, it isn’t intentional; it merely slips a parent’s mind. But that means most soon-to-be college students don’t know how to tackle budgeting properly, and that’s troublesome.

Luckily, parents can fill this knowledge gap with ease. With a guide for parents covering budgeting for teens, parents can instill critical lessons before their students leave for college, ensuring financial wellness and stability.

If you and your student want to learn more about finding scholarships, sign up for our free college scholarship webinar! Take a moment and head over to http://thescholarshipsystem.com/freewebinar to reserve your spot today.

The Benefits of Budgeting for Teens

Before digging into the basics of budgeting for teens, it’s wise to pause for a moment and consider how budgeting can benefit students. With high schoolers, it’s normal for them to think that budgeting isn’t necessary. After all, they usually have few (if any) expenses they have to handle outside of personal spending.

But by creating their first budget now, students can learn valuable lessons. They can gain insights into their income and spending, which is a critical starting point.

Additionally, by creating a mock college student budget before leaving home, they can see how far their money will (or won’t) go once they head to school. By handling this in advance, a high schooler can potentially avoid financial mistakes or make other adjustments to ensure their needs are covered.

Parents need to remind teens that a budget is essentially a financial plan. If students learn how one works in high school, and can create a reasonable one for college, their odds of experiencing a significant financial hardship diminish dramatically.

budgeting for teens

The Basics of Budgeting for Teens

Generally, the basics of budgeting for teens center around three things: income, personal spending, and savings. While some high school students may also have other financial obligations, most don’t end up with their first genuine bills until they are at least 18 years old.

As a result, budgeting for teens differs a bit from what most adults have to include. Here’s a look at what’s important to cover.

budgeting for college students

Identifying Budget Categories

Ideally, your teen’s first budget should include specific categories. For students with bills, each one would be its own line item. Then, they would need to set money aside for savings and spending, just as their parents likely do.

For those that don’t have bills, focusing solely on categories is sufficient as a starting point. It allows them to get a feel for budgeting, without including line items that aren’t currently relevant.

Typically, the categories would include the following:

  • Savings Goals
  • Food Spending
  • Transportation Costs
  • Entertainment Spending
  • Personal Care Costs
  • Miscellaneous Spending
  • Charitable Donations

Your student can then drill down in those categories, allowing them to budget for their unique needs. For example, their savings goals may include “emergency fund,” “college savings,” “buy a car,” “save for gifts,” or any other target that involves setting money aside. Budgeting for teens should be personal, ensuring it speaks to them individually. That makes it more meaningful, increasing the odds that they’ll learn critical lessons and stick with budgeting long-term.

basics of budgeting

Allocating Income

Once the categories are created, your student can allocate portions of their income to each one. How they go about it may depend on the kinds of obligations they have. For students that have genuine bills to handle, they may want to follow the 50/30/20 rule. With the 50/30/20 rule, 50 percent of their income should be focused on their needs, 30 percent can go to their wants, and 20 percent should go to savings.

However, many teens without bills don’t need to set aside 50 percent of their income for needs. As a result, they may want to adjust the allocations. For example, 30/30/40 is a great alternative if a teen does have some needs to handle. It promotes savings as a priority which not only is a great habit to instill, but also allows them to hit their goals faster. Some students may even be able to pull off 20/30/50.

It is important to note that many students have trouble separating genuine needs from wants. While certain categories are obviously one or another, many are a bit hazy.

For example, gas to get to and from school is a need, but gas to go to a concert one city over would be a want. A new computer for school would be a need, while a gaming computer purely for entertainment is a want.

Students should sit down and honestly examine every potential expense. If they can discern the difference between needs and wants now, their likelihood of long-term financial success goes up dramatically.

benefits of budgeting

Tracking Progress

With the categories and allocations in place, your student then needs to track their progress. This includes monitoring their spending and savings habits, allowing them to see if they are adhering to their budget.

This is particularly critical in the beginning. At times, teens may incorrectly estimate what they need to allocate for a category. Often, that’s due to a simple lack of experience.

As they learn about their habits and how far their income goes, they may need to make adjustments. That’s a critical step when budgeting for teens, as it allows them to really examine their patterns and make smarter choices.

Student Budget Worksheet Designs

While budgeting for teens can be handled through various smartphone apps, sometimes a manual process is a better place to start. Since a student budget worksheet doesn’t automatically categorize spending, students have to record their activities manually. This increases the overall level of visibility, ensuring they examine every choice they make, not just at the moment the decision is made, but also after the fact.

Generally, a spreadsheet design can be a great place to start. Here’s an overview of what a high school student budget worksheet and a college student budget worksheet may look like on spreadsheets.

Creating High School Student Budget Worksheet

As mentioned above, most high school students don’t have bills. This worksheet is going to be based on that.

Budgeted Spent
Savings
College
Car
Gifts
Food
Dining Out
Groceries
Transportation
Gas
Public Transit
Entertainment
Movies, Events
Hobbies
Personal Care
Clothing/Shoes
Hair Cuts/Manicures/Etc.
Miscellaneous
Misc.
Charity Donations

 

If your student does have bills, then the college student budget worksheet may be the better approach. Keep reading to see a sample one for college students.

Creating College Student Budget Worksheet

Budgeting for college students is a little bit different. In many cases, college students have bills high schoolers don’t.

However, the core budget worksheet is the same. It just includes a section dedicated to their financial obligations.

Budgeted Spent
Savings
Emergency Fund
Gifts
Bills
College Tuition
Room & Board
Books and Supplies
Car Payment
Phone Bill
Student Loan
Food
Dining Out
Groceries
Transportation
Gas
Auto Repairs/Maintenance
Public Transit
Entertainment
Movies, Events
Hobbies
Personal Care
Clothing/Shoes
Hair Cuts/Manicures/Etc.
Miscellaneous
Misc.
Charity Donations

 

That budget for college students is simply an example. There are many ways to create a budget for college students, so your student should consider their unique situation and make any necessary adjustments.

Ultimately, getting started with budgeting for teens is a smart move. It allows students to get a grip on their financial life early, increasing the odds that they’ll remain in good shape now and into adulthood.

If you and your student want to learn more about finding scholarships, sign up for our free college scholarship webinar! Take a moment and head over to http://thescholarshipsystem.com/freewebinar to reserve your spot today.

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