It's Budget Time

In the news today, the House rejected the Bill to raise the debt limit. Without getting into the politcs, this made me think about budgets. Nobody likes to budget. Not even the President and Congress can agree on a budget for the Federal Government. So how are you going to help your kids and teens put together their budget?

The first rule is that their budget has to balance. They can’t issue "Kid Bonds" to cover their deficit. LOL!

STEP 1: Make a List

Have your child make a list of things that they spend their money on now and things that they want to buy in the future. Now it’s your turn to make a list of all the things that you spend your money on for your kids as well as for the future.

The budget lists might look something like this:

Kid's List: Toys (American Girl Doll or DS Game Boy), Candy, Books, Music, Movies, Sharing/Charity

Teen's List: Clothes, Music (iTunes), Movies, Video Games (Xbox live), Electronics (game consoles, iPod, laptop), Cell phone and a cell phone plan (ie texting, data plans), Dining out (Starbucks, McDonalds), Magazines, Car, Sharing/Charity

Parent's List: Clothes, School lunches, Haircuts, Toiletries, Computer for school, Movies/Concerts, Vacations, Sports, Hobbies, Tutors, College, Sharing/Charity

STEP 2: Decide on Responsibility

Now that you have a list of things that your child and you spend money on, it’s time to combine your lists and decide on who is paying for what. For each item, decide on whether your child will be responsible for the entire purchase or if you will pay for the item. For some items, you can split the cost of the item. For example, you can pay for the phone service but your teen could pay for their text plan. 

STEP 3: Determine Costs

Numbers are next. For each item, determine budget amounts based on what you already spend or research a future expense. For example, have your teen do some research to find out how much the new cell phone that they want costs.

STEP 4: Balance the Budget

Add up your budget numbers. This will be how much money your child will need as “income” in order to balance their budget.  The income part of the equation will be allowance, gifts (holiday, birthday), extra jobs around the house (kids & teens), and part-time or summer jobs (teens). If it doesn't balance, then they will have to either cut an item from their budget or work an extra job around the house!

Now, maybe the Federal Government could take a lesson from your kids and teens!

Remember to check out my blog Financial Coach for Kids and Teens for more information.

Here's an interesting link to share with your kids and teens: The US National Debt Clock