Teaching Your Teens to Thrive!

Start a New Life for Your Teen this New Year. 

Whether you are a billionaire, a thousandaire or a widow with only one mite, when you are buried in basic needs, you are not living a very rich life.  The trouble is: how do you escape the rut of basic needs when most of your income is eaten up by housing and transportation and you're always running out of money before the end of the month!

Since we're not taught how to budget in high school or college, it really is up to you to teach your kids how to thrive, instead of merely surviving. Most people pay bills and then try to scrape a life together on what's left over.  This recipe for the rich life has you savoring life first -- before you pay the bills!

Let's say that your teen's allowance is $100 a month . . .

The Thrive Budget:  50% to thrive and 50% to survive

10% (or $10) Buy My Own Island fund
10% (or $10) Charity
10% (or $10) Education fund
10% (or $10) Fun, Immediate
10% (or $10) Fun, Big Ticket
50% (or $50) Basic Needs

With electronic banking, this should be fun and easy to do each month!   Essentially, you set it up once and then everything happens automatically. 

1. Buy My Own Island fund: Set up a minor's Individual Retirement Account through your brokerage.  This should be the first auto-deposit every month -- money that earns money while you sleep!  The habit of investing is what's important to establish first.  If you don't know which stocks or funds to buy, just use a Treasury bill ETF for now.  (PowerShares.com has one.)


2. Charity: Have your teenagers write a check to their favorite charity and pop it in the mail!  (Let it be their choice, not yours.)


3. Education fund: College savings plans, aka 529 plans, are a great way to save up for college and the contribution should be tax deductible.


4. Fun, Immediate: CASH!!  Whether it's a movie or ice cream, when the cash runs out, the fun must become free -- like picnics, like board games, like spin the bottle (just kidding).


5. Fun, Big Ticket: Most bank accounts have a savings account attached these days.  Let that be where your teen saves up for the new iPod or even a car!


6. Basic Needs: Standard Bank Account.  The key here is to have 50% spent on thriving first -- before basic needs -- so that the focus is on living a rich life, instead of struggling to survive.  Now, your teen has 50% of the $100, or only $50 to spend on basic needs.  Your teen won't have to worry about food, housing and insurance yet, but why not let them buy their own shampoo, after school snacks, gas, clothes, etc?

The Thrive Budget is a great way to teach your kids healthy money habits, where the focus is on building a better life, rather than just paying bills.
These budgeting strategies are explained in greater detail in Put Your Money Where Your Heart Is, my new book!  Buy it now on Amazon.com, or in your favorite book store or website!

Ask Natalie: The Thrive Plan sounds great, but my teen is already complaining that s/he'd rather have fun than give to charity.  What do I tell her?

What we're doing with the Thrive budget is teaching the average person exactly what it takes to live like a billionaire.  Billionaires, like Steve Jobs, the co-founder of Apple Computer, understand the flow of money.  They sleep on couches to launch their dream businesses.  They sit on non-profit boards to meet the great minds and deep wallets who will invest in their dreams.  They never overspend on basic needs or fleeting fantasies. So, tell your teen that this is Billionaire Boot Camp!  S/he's never going to get rich by burning through her dough and/or blowing her charitable contributions on movies.   

If s/he wants more money for fun, there is one easy way to do that while remaining in the dream come true life budget -- increase income.  If her basic needs are out of whack -- which is easy to do with high gas prices -- there's a solution for that -- get creative!

My teenage son discovered that he was spending over $50 a week on gas going to work and college.  The second week, he bought a bike and pedaled around town for free.  That was an instant reduction in basic needs!  Get creative.  Carpool.  Take public transportation.  Buy a hybrid or an electric car.  Ride a bike. 

The best solution to a surly teen, however, is to start these money habits earlier.   Teens are so busy trying to buy more freedom from you that they'll forget to attack the family traditions that have been ingrained since elementary school. 


©2008 Natalie Pace

Author Bio
Natalie Pace, author of Put Your Money Where Your Heart Is (Published by Vanguard Press; 978-159315-491-2), is adding a splash of green to Wall Street and transforming lives on Main Street. She is the founder and CEO of one of the most respected independently owned financial news organizations in the world. She has been ranked as a #1 stock picker from TipsTraders.com and has partnered with Forbes.com. She has repeat guest appearances on Fox News, Good Morning America, Time Magazine, More Magazine, USA Today, NPR and Kiplinger's Personal Finance. She currently lives in Southern California.