Budgeting 101: A Guide for Parents and Teenagers
By Mydoh
Free Tool:
A Savings Goal Calculator For Your Kids
How can your kids buy the things they want? Our savings goal calculator takes into account kids’ income, spending, and savings to show them how long it will take to reach their savings goal. In less than five minutes, they’ll have a personalized savings plan that shows them how long it’ll take to save up for that Star Wars LEGO set or a trip to Disney.
By using this tool, your kids will learn about:
Budgeting
Budgeting is important in helping kids and teens learn how to manage their money and become independent.
They’ll learn the key components of a budget: income, expenses, and savings.
Saving
Research shows that kids’ money habits are formed by the age of seven—so the earlier they learn about saving money, the better!
Setting a savings goal helps kids make a conscious decision about their money.
Wants vs. Needs
Understanding the difference between a need and a want is fundamental to building good money habits.
By creating a budget, kids can be responsible for paying for their own needs while saving for their wants.
How To Use this calculator
Step #1
What are their goals?
A new pair of sneakers? The latest gaming console? Concert tickets? Your kids can list up to 3 goals and how much each costs.
Step #2
How much money do they earn each week?
Have your kids enter how much money they’ve already saved plus any money they earn each week through chores, an allowance, or part-time job–it all adds up!
Step #3
How much do they spend each week?
Here’s where your kids need to fess up about how much they spend each week. Input spending on various categories from cell phone to shopping to hobbies to food.
Step #4
How much can they save each week?
Our money calculator does the math and will calculate how much your child can save each week, based on their spending. and how long it’ll take to reach each goal.
Step #5
How long will it take to reach their goals?
Your child will get a personalized savings plan that shows them exactly how many weeks it will take to afford up to three things on their wish list.
Savings Goal Calculator for Your Kids and Teens
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FAQ
Having a budget gives kids and teens a plan for how they want to spend and save their money. By learning to budget, kids understand they have a finite amount of money and may have to choose between their wants and needs, as well as prioritize what they want to save for in the future. A personal budget is also an important money-management tool that will serve them as adults.
Kids can create a budget by listing all their income sources (such as an allowance or part-time job) and how much money they bring in each week or month. They can then list everything they spend money on and the amount for each category. The difference between the money made and money spent is called their “net savings.” Want to know what a healthy budget looks like, and how much of your budget should go toward needs versus wants? A good rule of thumb is the 50/30/20 principle: 50 per cent for needs, 30 per cent for wants, and 20 per cent for savings.
Typically, financial goals for kids and teens revolve around saving money for something special. They may be short- or long-term goals. An example of a short-term savings goal could be: “I want to buy a video game and I need $20 more. I will save $5 each week, so that I can buy the game in four weeks.” An example of a long-term savings goal could be: “I want to save enough to fly to Thailand during my gap year. I will save $30 each week for one year.”
Parents can help motivate their kids to save by encouraging them to determine why they want to save in the first place and to set a specific goal to achieve it. Another way to motivate kids to save is to make it fun by gamifying their savings goals. If your child is saving for a long-term goal, encourage them to celebrate milestones along the way to help reinforce their motivation.
As a general rule, your kids should save at least 10 per cent of their income, including money that comes from an allowance, part-time job, or other avenues. If they follow the 50/30/20 budget rule, then they’re saving 20 per cent of their income.