A simple spending plan

Ever feel like you are becoming a mobile cash machine for your teenage children? Here are some tips for helping them manage their own money (and leave yours alone!), by creating a spending plan. The simplest way to do this is to establish a system following these four rules:

1. Where does it go? Start by working with the money your child has now. Where is it going to go - books, clothes, savings, or gifts? When it’s time to decide where the next money that comes in is going to go, first look back to see if the last money actually went where it was supposed to. If not, talk about why and what needs to be adjusted this time.

1. Use a simple system that works. Apps and money programs are great conveniences, but can overwhelm those just beginning to create a spending plan. Don’t struggle to make your family’s finances fit into a particular model just because you think it should; many families get frustrated and abandon this exercise because the system is not meeting their needs. Instead, keep it simple—whether it be a straightforward spreadsheet or a series of envelopes for different goals—and you will develop the system that works best for your family organically.

1. Keep sight of what’s important. As your children begin to make decisions as to where the money is going, remind them of their dreams and goals. If there is not enough money to make everything happen now, help them prioritise and develop a plan for the future, maybe looking ahead to secure a holiday job.

1. Commit time to make decisions. Becoming financially well requires active attention. Schedule time with your children to review their plan on a regular basis and before any big financial decisions are made.

No matter what age they are now, your children can learn to master the cycle of living financially well - where work creates income to spend, spending behaviours are guided by values, and goals help prioritise those values. With your guidance, support and encouragement, your children will be ready for financial independence and the freedom it will bring to all of you!

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