Often teens have no idea how much little expenses add up over time. As Ben Franklin observed in one of my favorite quotes:
To help teens identify the leaks sabotaging their money row boats, conduct an occasional spending audit. If your teen’s spending is confined to a prepaid card or a bank debit card, the steps are easy.
Just follow these mini audit steps:
- Pick a time-frame. A month works well for older teens who have regular discretionary spending. Longer periods make sense for younger kids who spend less frequently.
- Export the transactions for the period. Good online banking or card offerings will have a simple way to download transactions for a specific time period into a spreadsheet.
- Identify a few key categories. Eyeball your teens transactions and look for just a few common recurring categories. Fast food? Online gaming? Starbucks runs? Keep it simple and relevant here.
- Add a category column. Add a column to your spreadsheet that assigns each transaction to one of the handful of categories identified above.
- Sum up the totals in each category. The SUMIF function in Excel or in Google sheets comes in handy here. Use it to construct a simple table summarizing the total expenditures in each category for the period
- Draw a clear picture. Make a simple pie chart or bar chart that highlights the total spending by category.
- Discuss, don’t judge. Discuss the results casually without judgment or emotion. If you can’t, find the spouse, partner, relative, or mentor who can. You want to lay the groundwork now for financial transparency and consultation later when the stakes are much higher.
Keeping the audit simple and non-judgmental is critical!
Let your teen own the discovery. You want to create the shortest path to that “Aha” moment: “Oh, wow! That stuff really adds up!” Ideally followed by the epiphany: “Just think how much I could save if I ratchet that back a bit or find a cheaper alternative.”
Bingo! That’s how kids learn to right their own financial ships.
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