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Saving by teaching teens how to live on a budget

Raising children is expensive these days, and when kids hit those teenage years, the costs can skyrocket.

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So how do you teach your children that money doesn't grow on trees? Give them a realistic budget and make them stick to it. That's what Holly and Dwayne Johnson, of Grayson, Ga., did. Not only did they save money, they have taught their sons valuable lessons about personal finance.

Bankrate: You mentioned attending a financial seminar. What did you learn?

Holly and Dwayne: Well, when we started going to the seminar, it encouraged you to include your teens to be as much a part of your budget as possible. So we sat down with our financial software and showed them how we were budgeting, and it meant nothing to them. So we said, you know what, if we actually gave them their own budget for their expenses they would have to do it. So we figured out how much we were giving them to go to the movies, to go out to eat, clothing, everything. And we just said, 'OK, we're going to start giving you this much money.' There are certain things, any kind of groceries; they don't have to worry about. But going out with friends, they go on camps during the summer, they have to save up their own money for those.

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Bankrate: What was their reaction?

Holly and Dwayne: (laughing) The first month they spent all their money on video games. Then it came about that they needed some school supplies, and we said, 'You have the money for that.' Of course, they didn't have it. So we gave them the money and then deducted it from the next month's budget. Of course they fought about it, told us how unfair it was. (Laughing). Then they realized we were going to be serious about this. By the third month, they were saying, 'Can we go by the Salvation Army secondhand store to buy T-shirts?' and we said, 'Yes, we can.' They realized that they had to stretch their money or they wouldn't get to have any fun.

Bankrate: Do your children ever ask you for more money now?

Holly and Dwayne: They still push the limits sometimes, especially when some new video game comes out. My son wanted to buy a new "Mario" game and now he needs shoes, and he can't get shoes until June because he spent so much money on his video game.

Bankrate: Your eldest son will be turning 16 soon. How will you handle the driving question?

Holly and Dwayne: He's already saving for that. What we did for that was we told him we would give him $3,600 toward a car, but he was not allowed to get a car or to drive until he gave us $1,600 for his yearly insurance. So he is already applying for jobs.

Bankrate: Do you recommend this system to others? Why?

Holly and Dwayne: We just realized that they had no concept of how much money we were giving them. They just asked for money anytime they wanted something, and we were not ending up with enough money at the end of the month. And so when we all sat down and got serious about it, it helped everybody.

Bankrate.com's corrections policy
-- Posted: June 4, 2008
 
 
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