If you're part of the (unfortunately small) group that learned great budgeting skills growing up, consider yourself lucky. It seems like almost no one hears the right lessons these days. In the meantime, kids are watching hours upon hours of television — and what budgeting lesson does that teach them? "Spend, spend, spend!" And worse yet... "borrow, borrow, borrow."
For some paranoid parents, the solution has been to prevent children from spending at all during their teenage years. What a waste! This is the best opportunity for children to learn how to spend wisely, and finally get a wise voice to contradict what they hear in the world of constant advertising. As such, I'm planning ahead to make sure that my children receive the best possible budgeting guidance during their teenage years.
One of the ways to start is by getting a savings account into gear early. While it's great to start a college fund, it's unlikely that your children understand the value of an education at this stage in the game. But they do understand the value of a bicycle, video game, or iPod. By teaching kids about how to invest gradually for something that they want, you can teach them the value of saving over borrowing.
Another good technique is getting a prepaid credit card for your child. This way, you can load their allowance or earned money onto the card, giving them a lot of independence to spend as they see fit. However, they also won't be able to cause overdraft charges or go beyond their budget.
If your child doesn't have an outside income source, such as a paper route or part-time job, see what you can do to help them find work of this nature. While an allowance can be a good starting point, income earned from someone else will give a much better sense of responsibility.