It feels great when your kids earn their first paychecks in their coveted summer jobs. Their first instinct might be to rush out and spend away. But what happens when school starts? The money is long gone. The best way to make that money last through the year is to set up a budget. It’s an easy math problem you can teach your kids to solve.
If they work a job for 3 months and make $1,000 per month, they’ll earn a grand total of $3,000. To make the $3,000 last all year, simply divide this amount by 12 (the number of months in the year) and that leaves $250 to spend per month.
The most important lesson this teaches is how to live within their means. Teaching this early can avoid many problems down the road. It can be easy for young adults to get into credit card trouble with the “I’ll pay for it later” concept. If they fail to budget their money, they might spend too freely up front and not have it later to cover their expenses.
In the above example, they know that they have a limit of $250 a month to spend. If there is something else they want and don’t have the money, they will need to wait and save up until they are prepared to pay for it. If it means missing that Huey Lewis concert this month (don’t laugh, ‘cause I’m going) then that’s a lesson learned in refraining from spending money they don’t have.
How young were you when you started to budget your money? Share your story in our “leave a response” section.