One year in: lessons learned from teenage budgeting

This time last year, we began a bold new endeavour to teach our early-teenager something about the value of money. We switched from weekly pocket money to a living allowance paid into a Spriggy direct debit card; we negotiated a contract; talked about budgeting; and encouraged him into his first casual job.

It should come as no surprise, especially if you’ve been following along, that it hasn’t been smooth sailing. Mr 14 is a frequent spender, buying little things regularly, like hot chips and Slurpees; and, both Mr 11 and Mr 14 are gamers, buying Xbox Live credits, skins, games, and replacement controllers. It meant that practical expenses like clothing and haircuts were avoided, in favour of free vendor t-shirts we picked up from conferences and the occasional haircut donated by his mother (*cough*) when she couldn’t handle looking at the greasy mop anymore. There are also no savings, despite Mr 14’s desire to save for a better computer.

Last post, I talked about switching Mr 14 up from a weekly to a quarterly allowance in hopes of accelerating the lesson in budgeting. But, in spite of the top-ups in allowance that come from both his casual letterbox drop jobs, he was skint before the school term was out and didn’t have any cash available for the holidays or for buying Christmas gifts.

Truth be told, I was expecting him to come to us part way through the year and renegotiate, but he never did. This is an attribute of his personality more than anything else. I know some kids that bargain until they’re blue in the face. I urged him to take this 12-month milestone as an opportunity to review the contract and see what levers could be pulled to change his situation. We had that talk yesterday.

We will be continuing the quarterly allowance payment, but we’ve changed some parameters. Mr 14 requested an increase from $50 to $80 per week. We had to coach him through framing the justification; it’s a big jump, and his proposal wouldn’t have cut it had he taken it to an employer. We agreed to $80, but with some adjustments:

  • We’ll take $15 per week, straight off the top at the start of the quarter, to put into a dedicated, hard-to-get-at savings account. Sorta like what happens with superannuation. We may use a dormant online savings account that we already have, find a youth savings product or give the Spaceship Voyager investment account a go. I’ll keep you posted.
  • Mr 14 will have to get off our phone plan and pay for his own. He chews through a lot of data but doesn’t feel that when it’s all absorbed under our unlimited business phone account. Do you have any recommendations? We’ve been looking at a Vodaphone sim-only pre-paid deal.
  • To earn the increase, I’ll be recruiting Mr 14 into some of the meal planning and cooking. He does occasionally cook, but I’m haphazard with grocery shopping and meals, so it’ll be good for both his and the household budgets, if we get a bit more disciplined as a collective.

All-in-all, though I wouldn’t declare it a successful outcome, this first year of observing how Mr 14 handled his own budget has been interesting and worthwhile. We’ve always treated it as an experiment, anyway, so while it isn’t a success, it’s also not a failure. There are good things in the mix: he saved some cash early in the year to spend on shoes he wanted; he bought his own ticket to a concert; he increased his casual workload by getting another flyer distribution customer; and he’s primed and ready to apply for work at some nearby retail chain stores. This all happened in a year of typical turbulent teenage changes that happen between 13 and 15 years old, and I’m proud that we’ve all made our way this far through.

One constant through the experiment, so far, is what I hear from other parents when we talk about Teenage Budget, or some aspect or other of our allowance setup. Even financially accomplished and successful investors are not talking to their own kids about money, and several of our friends have admitted they wouldn’t even know what to say. That’s why we want Teenage Budget to be a transparent record of the lessons we try to teach our kids about finance. If nothing else, it provides tips and some subject matter to trigger a discussion or an experiment of your own, like it did for this one.

Inspired by the team @TeenageBudget, we’re kicking off our very first financial experiment with the kids. 3 jars for Saving, Spending & Giving.

Anyone else tried something similar? pic.twitter.com/BrQN4OIGCH— Dads.Co (@dads_co) September 4, 2018

How are your experiments going? Are you reading the latest Barefoot Investor for Families book? I’d love to know what you’ve been working on and how it’s been going, so consider sharing a guest post.

We do not have a commercial arrangement with Spriggy, except as customers, but if you sign up with this affiliate link, your account will come pre-loaded with $5 and our account will be topped up with $5, too.

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