If you have a teenager at home, he or she is closer to going out on his or her own than you might like to admit. You’ve worked hard all these years to teach the big lessons and prepare your child (and you!) emotionally for this huge step. But have you taught the smaller lessons? The practical lessons? For example, does your child know how to set a household budget?
Yes, it’s a totally mundane topic. It’s boring. Sometimes it’s stressful. It’s so much a part of your day, your life that you may not even think about it as an individual topic to teach. But budgeting is a critically important topic to teach — and it would be so much nicer if your child could learn from you rather than learning the hard way (ahem). Much like you did when you were younger? (Ahem, ahem.)
Creating a household budget, as you well know, is not just, “I have this much coming in and this much going out.” It’s also about establishing priorities with that income. It’s understanding the costs that go with choosing the ritzy new apartment on the edge of a new development over the slightly older but clean and attractive apartment closer to public transportation. It’s why sirloin for dinner every night isn’t realistic and why pricey shoes are not an investment strategy.
Once the basics — food, shelter and (some) clothing — are taken care of, what are the other priorities? Talk to your child about how priorities will vary according to circumstance. While you, as a parent, prioritize paying for certain child-rearing expenses over entertainment, a young adult might prioritize part of the budget for socializing.
Short-term and long-term planning
What can be harder for teens and young adults to understand is the need for planning, both short-term and long-term. Saving and investing in anticipation of buying a house with a spouse that doesn’t yet exist or a retirement that feels so far out of reach can be a hard sell!
Think back to your youth and how you perhaps didn’t save quite as much as you could have and how that impacts you now — or how you made some poor short-term planning decisions and how that got you in a bind. This can be the harder part of the talk, but keep at it. You don’t necessarily need to get into detailed technical discussions of the financial markets, but you do need to present the issue of planning early and often.
During the course of lessons on budgeting with your child, presenting challenging budgeting scenarios and asking how your child might approach them can be instructive and drive home the importance of prioritizing and planning. There rarely is one right answer — and it’s not typically, “Call home and ask mom for money.”
As the lessons about household budgeting sink in, you may want to have your child sit down with you as you pay household bills. While it can be a little uncomfortable to some to have their child see the exact bank balance, letting your child see what it takes to keep the household lights on and gas in the car can be eye opening and instructive. The ritual of regular bill paying is common to just about everyone — and as such is a necessary task and skill.
Household budgeting isn’t the most attractive or looked forward to topic to bring up with our kids. As much as they learn from osmosis just by watching you all these years, parts of the lesson should be clear, overt and explicit. Learning to handle this seemingly mundane task well and gracefully actually one of the better gifts you can give to your kids.
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