One
vital skill that many adults never learn is how to create a budget.
It is crucial that people know first what their income is and
what their outgoing expenditures are, to ensure that they do
not create a situation where they go into debt.
If you can, spend senior year
of high school helping your son or daughter to open up a checking
account, and then teaching them to balance his or her own checkbook,
since this is a good way to help track spending. Then,
to help your young adult learn how to create a budget, sit down
with them and review the expenses they will likely have. For
more on this, download the Income
Management Worksheet (PDF).
Some typical expenses of young adults include: food, clothing,
transportation, car insurance, gas, parking, and entertainment.
Like most adults, it is the entertainment or variable expenses
that either make or break a budget.
For many young
adults, this will be the first time they have a steady stream of
income. At first, their weekly paycheck may seem like a great means
to enjoy life: party, buy new clothes, gamble, and entertain friends.
But as a parent, you may need to remind your son or daughter that
not only do they have a new paycheck but also new responsibilities.
You can help them to set a reasonable limit on how much they can
afford to spend on entertainment, and ideally include some savings
goals in their budgets.
As lifestyles change, so do expenses. That is why it is important
to review the budget on a monthly basis until your child feels
comfortable doing it himself.
In teaching your young adult how to use a budget, you will give
them a life-long tool.
Budgeting
for the
College Student
If your son or daughter is going away to college, books and student loans are
additional expenses that will need to be factored in to their budgets. Once you
have determined which expenses you are willing or able to cover, you may want
to consider depositing that amount monthly into a bank account. Be clear that
you are giving your student a fixed amount of money that has to last the month,
and if they run out early, they will need to be able to explain where the money
was spent. Be patient since it will be a learning experience for both of you.
