Parents may push their children and teenagers to start budgeting as soon as they get their first job at a fast food restaurant or start having bills, like the monthly cell phone bill. Eighteen-year old teenagers should start making a budget for their money, since 18 marks several milestones, including become a legal adult and starting a prosperous postsecondary educational journey.
Determine Income – Some parents will continue to give their 18-year-old teenagers an allowance based on their contributions in the home in terms of monthly or weekly chores, for example. On top of the allowance the teenagers get from home, they may also have a part-time job where they work when they are not attending school. To start a budget for an 18-year old teenager, determine what the monthly income is for the teenager in question. If the teenager has both an allowance and a working income, add the two incomes together to get a single income sum.
Expenses – Go through the teenager’s monthly expenses to determine what bills or utilities need to be paid on a monthly basis. This section will vary greatly for each 18-year old, as some might live at home and others might live on their own. For example, a teenager living on her own may have rental fees, utilities, bills and car payments as her expenses. A teenager living at home may have a limited set of expenses, such as telephone bills and car payments, but they should be addressed in the budget. While some expenses are fixed, others are variable. Fixed expenses are the payments that must be paid each month as a fixed fee, while variables can change each month, including clothing and haircuts.
Goals and Funds – The budget should be designed to suit the teenager’s goals. For example, the 18-year-old may be planning on attending college or university in the upcoming years, so funding for books, tuition and perhaps a living facility needs to be incorporated into the budget. If you are helping an 18-year-old complete his budget, ask him about his financial goals and help him budget accordingly. While some budget for college, others budget for travelling the world. Do not assume that every 18-year-old wants to go to college directly after graduating high school.
Savings – When the expenses and the goals have been addressed in the budget, the 18-year-old may still have some funds left over. While the teenager may want to spend this money, a portion of the amount should be placed aside for savings. Savings are good to have for the unpredictable moments, for emergency situations or if you want to treat yourself several years down the road when you have completed college and want to buy a home, for example.