Savvy Stuff: Top 10 Budgeting Basics for Teens


Teen Budgeting

Good budgeting skills will help teens effectively manage their personal finances. The earlier they begin keeping a budget, the better. Encouraging your teen to develop one helps them become more accountable for their own finances.

Show Me the Money!

First, your teen should spend 1-2 months keeping a money diary – writing down every purchase, even the smallest expense. With their expenses down on paper, they can see where their money is going, and what spending habits need to change. Record-keeping must be as specific as possible.

After the Tracking.

After keeping their money diary, help your teen make a list of potential cutbacks – areas where they can get by with spending less. Help them make adjustments each month as they discover what works, and what doesn't.

Monthly over Weekly.

Consider providing your teenager a monthly allowance, rather than weekly. Require that they make the money last an entire month, and encourage him or her to accurately record what's been spent and where it was spent. Here's a suggestion: consider giving them a Prepaid Student Card and each month add their allowance to the card. A spending record will be available for them (and you) to review. They will feel very adult-like with a plastic card of their own and you have a great tool to help them manage their money. When the money is gone, don't add any more until the beginning of the next month.

Making the Wish List.

After devising a budget, your teen should create a "Wish List" of things they'd like, or need, but can't afford right now. A lot of teens can achieve their Wish List once they stick to a budget. Help them make it a goal to purchase at least one Wish List item.

Addressing Shortfalls.

To help address budget shortfalls, suggest ways your teen can earn more money, or cut back on expenses, such as renting a DVD to watch with friends rather than going to the movies; or maybe car pooling through the week to save on gas for the weekend.

Needs vs. Wants.

Show your teen how to modify a budget by categorizing expenses as needs (expenses that are unavoidable) and wants (expenses that could be cut if necessary).

Control Impulse Buying.

Encourage your teen to think through spending decisions, rather than impulsively buying items right away. Show your teen how comparing prices or waiting for an item to go on sale can save money.

Responsibilities and Age.

As spending responsibilities are shifted to your child, he or she will have to budget for them accordingly. For example, if they are the one to pay for weekend activities, they'll need to effectively manage their money by putting these items into a spending plan. Also, let them know spending responsibilities will typically increase with their age. But they can also increase if your teen starts to exceed your ability to provide. For example, if junior wants a car and you're not going to buy him one, he'll have to adjust the budget to expand his savings so he can purchase the car on his own.

No Bail Outs.

It's very important to resist being your teen's financial savior. If he or she can depend on you to come up with all the extra cash, they may never fully learn to manage money wisely. But at the same time, don't be preachy and judgmental – no doubt he or she will make spending mistakes along the way. Your teen needs to know they can always come to you for information, support, and advice.

Some rapid-fire, quick tips.

Advise your teen to do the following in order to achieve a healthy balance between money in & money out:

  • Resist impulse buys.
  • Don't go shopping with friends who spend a lot.
  • Tote their lunch to school (or work) as much as possible.
  • Stay away from vending machines and convenience stores.
  • Only visit an ATM once a week (plan ahead for needed cash).
  • Entertain at home.

GiveMe20 information: was developed by PSCU Financial Services, a credit union service organization, on behalf of its 550 member credit unions. The more teens know about money, the more they can act responsibly with their money. offers busy parents quick, fast-read tips and tools for raising a financially literate child.

More Tips

Top 10   Number 1: Be Realistic
Read all of our Top Ten Tips to control your money.


  66 Ways to Save Money
The Consumer Literacy Consortium provides this handy list to help you save money.
  17 Things a Five-Year-Old Should Know About Money
The Credit Union National Association's Thrive by Five program provides this one-page list of things young children should know about money concepts.  View the list only or visit the complete Thrive by Five web site.

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