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How to Help Your Adult Children Create Their First Budget

How to Help Your Adult Children Create Their First BudgetIt’s hard to believe, but your kids are on their way to becoming their own adults. Time goes fast, and it probably seems like they were tiny little ones just a few years ago.

As a parent, you have done a lot to get them ready for their own life. If you would like to add another helpful preparation to the list of things you have taught them along the way, consider helping them create their first budget.

When kids move out, most of them don’t have a clue as to how the ‘real world’ works. You have been paying the bills for years, mostly behind the scenes. The kids usually don’t see the utility bills when they roll in, and they don’t see the mortgage payment get taken from your bank account each month.

Now that they are getting ready to head out on their own, you can use your experience to help them avoid some silly – and costly – mistakes.

Start Early

This process can start before your kids are even thinking about moving out of the house. In fact, as soon as your child gets his or her first job, have them set up a budget that they can use to track where that money is going.

They probably won’t have many bills at this point, but it is still a good idea to use a budget. Set aside some for savings, maybe some for a car payment, and outline how the rest will be used. This is going to be a rather basic budget, of course. But, it will lay the groundwork for responsibilities later in life.

Explain Taxes

It is one of the hard realities of life that making $15 per hour doesn’t mean you actually take home $15 for every hour you are on the clock. The concept of taxes is something that is vaguely familiar to most teenagers. But, they certainly don’t have an intimate understanding of how taxes work.

Take some time to explain what kind of taxes they will pay as an employee, and how they can plan for filing their federal return each year.

Outline Adult Expenses

The expenses that you have to deal with as an adult tend to pick up over time. So, your child probably won’t have too many to deal with when first setting out. There are a few big ones, however, such as rent, car payment, student loan, and insurance.

Lay out how all of these things are going to work on a monthly basis. Tell them what they should cost, and how they can be minimized (like getting a roommate to share rent, for example).

Sadly, these kinds of things are not typically taught in school. So, it is your job as a parent to give your child the advice they need at this critical time. By sending them out with the right knowledge, you will increase their chances of making wise financial decisions.

 

Have you started teaching your kids how to budget? When did you first start teaching them about money and budgeting?

 

Photo courtesy of: jcall

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John Schmoll is a Dad, husband and veteran of the financial services industry. He's passionate about helping people learn from his mistakes so that they can live lives free from the shackles of debt and empowered to make their money work for them. You can check out his other sites: Frugal Rules, for ways to improve your financial literacy; and Sprout Wealth for tips on different ways to make more money. John has been featured on Forbes, Lifehacker, Yahoo Finance and US News & World Report and more. If you're wanting to grow your blog, check out my blog coaching services to see how I can help you take your site to the next level.

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