Description:
One way to help teenagers learn to budget money is to create a plan where their earnings are divided into three sections. A third of earnings go towards savings and investments, a third go towards personal spending and a third will go to the family budget (in certain circumstances this one third could go to charitable contributions, see below).

Discuss how investing and saving a third of one's earnings allow one's money to grow over time. Decide together how the third of the money designated for the family is to be spent/saved. Encourage your teenager to feel good about participating. Acknowledge how much you appreciate the support he or she has given to the family. Let your teenager come up with helpful ways for this money to be spent. For example, "I would like to give my sibling $5 a week for spending money," or "Tommy needs new sneakers. I can help pay for them." This new sense of ownership will help your teenager to better understand how the real world works and how much you do, as a parent, to meet the family's money needs on a daily basis.

Teenagers from wealthier families are able to explore more sophisticated investments like stock options, money markets etc. In such a family, the teenager should be encouraged to give a third of his or her earnings away. You can teach your child at an early age about the importance of philanthropy. The wealthier the person, the more he or she is able to give.

Sit down with your teenager to choose an organization that is of interest to him or her. Visit the organization with your teenager to see how this money is being put to good use. Acknowledge how much you appreciate your teenager's kindness and willingness to share.

These lessons can last a lifetime. Work with your teenager to help him or her have a better understanding of how to use money. Your teenager will be much better prepared to function in the world out on his or her own.