To help teens navigate budgeting, parents must first teach a simple step: identifying short- and long-term goals. Once teens can do that, they can develop a budget and timeframe needed to complete those goals.
For teens, short-term goals can be anything from back-to-school shopping to attending concerts to going to camp, while long-term goals can be pursuing higher education, making solo travel plans, buying a car, and more.
Teaching your child how to categorize their needs and wants can help them understand the urgency and importance of a goal. While needs are must-haves for survival (e.g., medications, insurance, commuting costs, etc.), wants are non-essential things that are desired (e.g., eating at restaurants, entertainment, traveling, etc.).
Consider teaching your teen to follow the 50-20-30 rule of budgeting: 50% for needs, 20% for wants, and 30% for savings goals. This will give them a clear idea as to how they should allocate their income.
Teaching them to budget can also be a way to introduce them to credit cards, debt management, interest rates, credit scores, retirement accounts, and how social security works.