Budgeting is a customary practice of the educated financial community, and teenagers can take away a lot of valuable information from watching their parents' budget meetings. My parents usually have their meeting at the kitchen table for a few hours on a Sunday afternoon. It starts by pulling out a laptop and opening the spreadsheets and expense trackers, and it usually ends when somebody is too exasperated to continue, or it is time to make dinner.

Here are a few key takeaways I got as a teenager from watching my parents budget.

Budgeting Is Not Comfortable

Budgeting is hard. It is not a fun or easy thing to do. I have seen my parents’ meetings get heated about last month’s budget. Usually, the disagreement is about simple, necessary expenses like gas or grocery bills that were higher than usual and could have been lower. This taught me that it is important to go into each budget meeting and maintain a calm mind. Budgeting can be a stressful topic, so ideally, you can teach your teenager to only talk about it with a clear, calm mind. Going in this way can lead to better solutions and better choices about your money.

There Is No Such Thing as a Normal Month

It is important to learn that not every month will be ideal and go to plan. Every month, the topic of contention within the budget between my parents is different. Sometimes it’s an unnecessarily high grocery bill; sometimes it is spending more than their discretionary income for the month. But that does not mean that budgeting is not working. Your teenager should know not to freak out and throw away the whole budgeting process because you overspent in one category for that month. If that overspending leads to underspending somewhere else, it is fine.

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Budgeting Is a Way of Making Priorities

There is no better way of making priorities than by making a budget. One way of teaching teenagers how to budget is by viewing it as a list of priorities. My parents do not value eating out as much as doing fun activities together as a family, such as going to the state fair. And the way they budget shows it. Does your teenager value college more than eating out with friends? Make them show it by having them allocate more money for college savings than for going out with friends. I value college, and I am saving 30% of what I make for it. I also enjoy giving to organizations in need and give 10% of what I make to charity. This is what I value more than eating out with friends.

Budgeting Is a Way to Tap into the Power of Compounding

An equation for compound interest would include money, wise investing, and time. The very first budget taught to me by my parents was five different envelopes, each marked with a different word—Spend, Give, Save, Birthday, and Tithing. I only got paid in cash for doing chores around the house, and my parents had set up this spreadsheet that told me how much money to put in each envelope. It was usually only $1 or $2 each. Then, they would give me the option of putting the money that was in the Save envelope into the 529 they had set up for me. This forced me to save at least a small percentage of everything I made and gave me the opportunity to invest it.

All that gave me the inputs for the compound interest equation: money through my savings and supplemented by parents and relatives, wise investing through a 529 managed by my parents, and a few extra years of time by starting so young.

Budget for Large, Unexpected Expenses

In some months, there will be emergencies. For a teenager, this could look like an expensive “once-in-a-lifetime” opportunity with friends, such as a concert with a band they love. There is no way that this expense will fit into their budget, and they may not even have the money they need at all. But if in the past, they had budgeted to save a little extra for expenses just like this, they would not have to miss the opportunity or borrow money from their parents.

In our envelope system, I would sometimes just leave money in the Save envelope instead of putting it into my 529. Because there was a Lego set I wanted to buy, or so I could just have that money available to me.

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Budgeting Is Making a Line of Best Fit

The perfect budget for every month doesn't actually exist. The perfect budget follower also doesn't exist. The way that I have learned to think about a budget—I probably read it in a book somewhere—is a line of best fit. All the data points surrounding the line are what your expenditures really were, and the line of best fit should match what you budgeted. Some points will be over the line, and some will be under. But they should be close to the amount you were aiming to spend. For me, this provides a nice visual for a more realistic budget.

A Budget Makes Your Spending More Meaningful

Purposely limiting what you will spend is a fantastic way to give more value to your money and time. A lot of people hate having to work, but almost everyone loves to have money—and this especially includes teenagers. Well, if teenagers limit their spending, like not going out to eat lunch every day and instead do it once a week or month, they can also cut back on how much they work. This choice would give them more time with their friends and leave them with more money for special opportunities, like that concert mentioned earlier.

The Bottom Line

These are just a few takeaways that I took from listening to my parents as they budget. I am sure there are many more lessons to learn if you let your teenager sit in on your next budget meeting. Only if they stay awake, though; these tend to get kind of boring.

Have you let your kids sit in on your budget meetings? What have you tried to teach them? What else have they learned from watching you? How else have you taught your children how to budget?