Budget Time

Nobody likes to budget. Not even the President and Congress can agree on a budget for the Federal Government. So how are you going to help your kids and teens put together their budget?

The first rule is that their budget has to balance. They can’t issue Kid Bonds to cover their deficit. Ha!

STEP 1: Make a List
Have your child make a list of things that they spend their money on now and things that they want to buy in the future. Now it’s your turn to make a list of all the things that you spend your money on for your kids as well as for the future.

The budget lists might look something like this:

Kid List
Toys (i.e. American Girl Doll, DS Game Boy)
Candy
Books
Music
Movies

Teen List
Clothes
Music (iTunes)
Movies
Video Games (Xbox live)
Electronics (game consoles, iPod, laptop)
Cell phone and a cell phone plan (i.e. texting, data plans)
Dining out (Starbucks, McDonalds)
Magazines
Car

Parent List
Clothes
School lunches
Haircuts
Toiletries
Computer for school
Movies/Concerts
Vacations
Sports
Hobbies
Tutors
College

STEP 2: Decide on Responsibility
Now that you have a list of things that your child and you spend money on, it’s time to combine your lists and decide on who is paying for what. For each item, decide on whether your child will be responsible for the entire purchase or if you will pay for the item. For some items, you can split the cost. For example, you can pay for the phone service but your teen could pay for their text plan.

STEP 3: Determine Costs
Numbers are next. For each item, determine budget amounts based on what you already spend or research a future expense. For example, have your teen do some research to find out how much the new cell phone that they want costs.

STEP 4: Balance the Budget
Add up your budget numbers. This will be how much money your child will need as “income” in order to balance their budget. The income part of the equation will be allowance, gifts (holiday, birthday), extra jobs around the house (kids & teens), and part-time or summer jobs (teens). If the income does not cover the expenses, then your child will have to adjust the budget by either eliminating/reducing the item or saving up until they can afford the item.

Now, maybe the Federal Government could take a lesson from you!