Spending some time away from home for the summer can be an opportunity for teens to manage money on their own for the first time. Because money learning is so experiential, this opportunity can be a first step for a young person to learn to manage money effectively — and independently.
If your child is going to camp, to a program on a university campus or overseas, or has a job for the first time, here are some ideas to get started on money management at a young age.
1. Budget — Creating a spending plan is an excellent first step. For a camp or program away from home, establish how much money your young person will have to spend for the period of the program. For a job, the teen can project out expected income for the summer. Then, put together a budget that includes money to be spent per day, week, or month on different items like food, clothes, transportation, and souvenirs. For income earners, a category in the budget for savings is also a great idea.
2. Accounting — Before the program or job starts, work with your teen to develop an accounting system that fits their lifestyle best. This may be a small notebook that can be carried around in a pocket or a backpack, or maybe a budgeting app for a smartphone. The idea is to keep track of daily expenditures, and add them up each day to determine if spending is on track per the pre-defined budget.
3. Practice — It is always a good idea to practice this method for 2-3 weeks before the child leaves home. That way, any problems can be worked out of the system, adjustments made, and questions answered.
For the adventurous travelers headed to a foreign country, it is important to know the exchange rate, and understand how it works. One approach is to practice converting the currency to dollars before leaving home, or create and track the budget in the local currency of the country.
This money management system can be a strong precursor to college accounting as well. If your teen tries this system for a couple of summers before leaving for college, independent financial management in college will be much easier.
Spending time away from home in the summer is a great opportunity for personal development. Money management skills can be a part of that development too.