Budgeting 101: A Guide for Parents and Teenagers
By Mydoh
FAQ
A savings calculator for kids works by inputting the dollar amount of your goal, weekly income and spending. It then calculates a free personalized savings plan that kids and teens can download and keep.
Our savings calculator shows kids and teens how many weeks it takes to reach their goal based on their earnings and weekly spending. It also provides a visual chart which kids can download and keep. The Mydoh app also has a Savings Goal feature which tracks their savings and has a visual representation of how much more they have to save to reach their goal.
The benefits of using a savings calculator for kids and teens is it walks them through the steps of calculating their weekly income, budgeting the money they earn, seeing how much is left over to save, and calculating how many weeks it will take to reach their goal. It then gives kids and teens a plan to reach their savings goals.
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.