Budgeting Lessons From An 18-Year-Old?

Recently we had the good fortune to travel overseas with our 18-year-old niece. Aside from being totally cool hanging out with her middle-aged aunt and uncle, I was impressed by her budgeting skills.  The budget, however, was not her spending money, but her text messages.

Her mother gave her an allowance of 200 texts for a two-week trip. One morning over breakfast, she volunteered how she was doing on her budget – 100 texts remaining. We were halfway through the trip.  By the last day, at the departing airport, I asked how she was doing, and she reported she had 10 texts left.

It seems lately I get more questions about staying disciplined with spending and saving, even from those who have “enough.” Everyone seems to worry from time to time that they might not be spending prudently.  If you know even a little about teenagers and texting, you can appreciate how much discipline she exhibited to stay on track.   Perhaps there is some wisdom in her accomplishment we all can use.

I believe there were three main components to her texting success:

1) Tracking.  At any time, it was easy for her to check her text budget on her phone.  For many people, tracking is the only missing component to successfully staying disciplined with spending.  It is my belief that credit card companies know this, and that is why you cannot easily obtain spending-by-category information instantaneously on most credit cards.  Fortunately, there are mint.com and smartypig.com, two places devoted to tracking spending.

2) Accountability. After the trip, my niece would be accountable to her mother.  At 18, that might be sufficient, but for many working adults and pre-retirees, accountability to Mom ended with financial independence from her. Nevertheless, by making her goal public to us at breakfast that morning, she made herself accountable to someone she cared about.  If you want to get serious about sticking to a spending plan, who in your life can you enlist to keep you accountable?  Ideally this would be someone who will not be judgmental but whose opinion you care about, and will ask you out loud how you are doing on a regular basis.  An important aspect of the accountability was also that we all knew it was only for another week.  The accountability agreement should last a finite period of time – having it indefinitely isn’t advisable, nor fair, to either one of you.

3) Rewards and Consequences.  The benefit my niece received from her breakfast announcement was an instant reward – praise and recognition.  Of course we noted her success gleefully with atta-girls and good-hearted amusement. As we get older and have more responsibilities, though, rewards for doing a good job with spending, especially, are tricky.  The last thing you want to do is blow the budget with your reward for not spending.

What were my niece’s consequences if she went over her text budget?  If you only knew her mother (my sister)!  Suffice to say, after 18 years, my niece knew better, but more importantly, she is a conscientious young adult.  Once we are free of the bonds of parents (woohoo!), it is up to us to create our own consequences (oh, bummer).  If we don’t, they will be created for us.

Every person will have their own successful way to track and build accountability, rewards, and consequences for their money personality.  For some, these activities come naturally, while others need guidance.  Success depends on understanding early messages we receive about money from parents, teachers, and authority figures, combined with the way we grow up and adapt to both hardships and windfalls.  Knowing my niece helps, too.

About the author

Holly P. Thomas, MBA, CFP®

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