Budgeting for Parents of High Schoolers

Wondering how to introduce your high schooler to budgeting? This article will provide tips for creating a first budget.

By Kaitlin Meyer — February 16, 2023

Tags: budgeting, credit building, expenses, high school, parents, saving money

Wondering how to introduce your high schooler to budgeting? Look no further than this article, which covers starting a minor's bank account, choosing a good platform to build their first budget, managing income and expenses in high school, and saving towards big financial goals. Learning to budget well and consistently teaches high schoolers the value of keeping track of money and allows parents to monitor and teach excellent financial habits. This article will provide tips for creating a first budget.

1. Setting up a Minor's Bank Account

Setting up a bank account is a good first step to managing a minor's money. Parents can view activity, and withdrawals and deposits usually require the parent's signature. Most banks provide the option of opening a checking or savings account. One good approach is to set up a checking and savings account. This way, high schoolers can separate money set aside for long-term financial goals by putting it in a savings account. A checking account for a minor may also allow them to have a debit card. Having a debit card is an excellent opportunity for high schoolers to learn how to spend responsibly before they have their first credit card.

2. Choose a Platform

An effective budget requires an appropriate place to store and perform basic calculations on data. There are several options, ranging from simple spreadsheets to apps to advanced software used by financial advisors and analysts. In high school, stick with spread sheets and, in some circumstances, apps.

Spreadsheets require manual financial data entry and program any simple operations, such as addition. Despite these inconveniences, a spreadsheet will allow a custom format for specific needs.

For example, one tab might be for recurring monthly expenses and another for tracking long-term expenses. Conditional formatting is a tool that allows a cell to turn a chosen color when a threshold, such as a budget, is exceeded. Functions are another powerful tool. Simple arithmetic functions make it possible to add all expenses into a "total monthly expenses" cell, subtract expenses from the monthly income, and set aside a portion of the money in a bank account towards a new investment, such as a new car.

Excel and Sheets can also apply the same operation to entire columns of cells. Column adding helps calculate monthly interest on, for example, a student loan. Two of the most common spreadsheets are Google Sheets and Microsoft Excel. Sheets is free, and students can sign up for all of Microsoft Office 365, including Excel, for free with proof of enrollment. Excel offers many more tools for extensive data management. Both softwares provide similar basic functionality. Google sheets allow shared documents, enabling parents and high schoolers to budget together.

Apps can generally link up to a bank account and a credit or debit card. Some apps allow parent and child access, such as Greenlight, PiggyBot, FamZoo Family Finance, and others. Credit card and bank apps often have some form of spending data and analysis built in. This takes the time-consuming task of adding up purchases off your shoulders. Apps also come with analytics, automatically dividing your spending into different monthly categories, allowing you to evaluate where you are spending money and how you are over budget. The downside is that you cannot change categories manually. In addition, many apps can be programmed to send alerts when a certain amount of money is spent.

Whether using a budget sheet or an app, the important thing is that both parents and teenagers have access and can set the financial goals they want. Trying a few options to find the best fit can be time-consuming, but it may be the most rewarding path forward.

3. Calculate Your Total Income

High schoolers generally have some form of recurrent income, whether from an allowance, a part-time job, or a summer job. In sheets, the parent can show how to plan a reasonable budget by predicting the approximate income. The total income is just what it sounds like: all the money that you make from different sources each month. This could be one part-time job, a side gig, an allowance, or a combination. In the budget sheet, enter monthly income in one column. If the high schooler makes enough money, this will be important for tax purposes. Students will learn how to plan for taxes, and they will be able to double-check what they see on their W-2 if they receive one.

4. Predict Your Expenses

High schoolers usually don't have typical expenses like rent or mortgage, groceries, energy and insurance bills, and other utilities or services. This does not mean, however, that high schoolers do not have any expenses. They may pay for gas, repairs, and insurance if they have a car or at least share the cost with their parents. They also spend money on food, coffee, hanging out with friends, going to the movies, subscription services like Netflix, buying gifts over the holidays, perhaps buying lunch at school, shopping for new clothes, and many others.

One difficulty associated with these spending habits is that recurring expenses may not exist. So how do parents and high schoolers lay out a budget with projected expenses? Setting a weekly or monthly allowance constituting a percentage of the total income is one good approach. This allows the high schooler to plan outings and other expenses while putting some of their money into savings. Make a column or two delineating a monthly allowance in the budget sheet.

5. Set a Realistic Goal

Now it's time to analyze all the financial data. With this information, a high schooler can set a financial goal for the next few months or years. Some parents may be familiar with the 50/30/20 budget rule: spend 50% of your income on needs, 30% on wants, and 20% on savings and investments. Since high schoolers do not have many expenses, saving a much larger portion of their income may be advisable. A high schooler's budget could have 70% devoted to savings and 30% to spending money.

Parents will want to sit down with their teenager and determine a good budget breakdown for their circumstances. If the high schooler owns a car, they may need a little more spending money. If they don't have a job and rely only on an allowance, saving a larger percentage might make more sense.

Once dividing the budget, the teenager can work towards bigger goals. Perhaps they want to buy a new car or a new mountain bike. In this case, the "savings" portion of the budget should be divided: one section for shorter-term goals and one portion for long-term goals, such as college. The teenager also can save a portion of their spending money each week to work up to their goal even faster.

6. Be Consistent

This is by far the most difficult part of sticking to a budget: consistency. Once deciding on a budget, it's important to work together to stick to it. Parents should check in with their teenagers, keep track of their budgets, and set up incentives for meeting goals. The only way to meet financial goals is to keep track of spending and expenses and curtail them to the desired savings. Everyone can make money; the hard part is successfully saving it.

Kaitlin Meyer

Kaitlin Meyer is a Master's student at Ohio State University (OSU), and is writing a thesis on snow microstructure inspired by her love for skiing. She earned a B.A. in Liberal Arts from Wyoming Catholic College (WCC).

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