#11: Parents' Guide to Teaching Kids and Young Adults Money Management: Easy Budgeting and Saving Strategies

Parents, you don’t have to be a financial whiz to teach your kids about money management! In this episode of LAUNCH with Shari Jonas, we’re diving into one of the most essential life skills for teens and young adults: managing money. From understanding the importance of money to saving and budgeting, this episode offers you a fun and easy method that you can teach your kids starting today.  Whether your teen or young adult is just starting to earn an allowance, landing their first job, or struggling to manage their spending, this episode has actionable advice tailored to their stage of life. If you’ve ever felt unsure about “money talk” and how to guide your child, this episode will empower you with the tools to make it easy, approachable, and effective. Tune in and take the first step in teaching your young adult how to thrive financially and confidently. It will impact their financial mindset forever.  

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Transcript

I’m so glad you’re here today because we’re diving into something that isn’t talked about nearly enough but is an absolute essential life skill: and that is, teaching your young adult about money. 

Now, before you hit pause because “money talk” sounds intimidating and you’re thinking, I’m not a financial whiz, what do I know about money? I get it. I’m not one either. But here’s the thing—You don’t need to be a financial expert to teach your young adult how to handle money. In fact, what I’m going to talk about today is so basic, that you can practice it on your own.

Truth is, many of us enter adulthood with absolutely no idea how to manage money. So it’s not just you or your kid—it’s a systemic problem. Schools don’t teach this in the academic curriculum. For some reason, they think it’s more important to teach our children calculus and geometry, than saving and budgeting. And yet, which would be more useful in our day to day lives? I haven’t used a compass in over 40 years.

I’m going to break this down in a way that’s simple, actionable, and—most importantly—teachable. By the end of this episode, you’ll have one clear method that easily explains how to manage money, plus a realistic plan they can start using right away.

But first, I always like answering the question why – Why do We Need to Teach Money Management to our kids. But this time, instead of stating the obvious, I’ll just mention some statistics, which you’ll find these both shocking and comforting. 

According to the National Financial Educators Council, 54% that’s more than half of young adults aged 18–34 lack basic financial literacy, which includes understanding budgeting, saving, and managing debt effectively. 

When asked, only 16% of millennials (aged 25–34) said they feel confident in their financial literacy skills. That means, 84% are not.

So if you’re thinking that you’re not capable of teaching them about money, most of them admit to not knowing much about it. In fact, when high school graduates were asked if they feel prepared to manage their finances nearly 75% replied no. 

In a 2022 survey, 76% of 18–34-year-olds said they wished they had received more financial education in school. 

 When asked about how this lack of knowledge impacts their anxiety levels, 72% report feeling stressed about money, with common concerns being student loans, credit card debt, and the inability to save.

As of 2023, approximately 59% of bachelor's degree recipients graduated with student loan debt, averaging $30,000 and 40% of them reported struggling to make monthly payments.

Because of all this financial stress, over 60% of 18–34-year-olds have had to delay major life decisions like buying a house, getting married, or starting a family.

So you can see there’s a correlation here. 

Money management is not taught, leaving many young adults financially illiterate and therefore unable to leave the house and go on their own, even if they want to

Which brings me to the next statistic: Nearly 40% of young adults under 25 rely on their parents to cover monthly expenses, like rent and utilities.  

So, clearly if you want to help your adult child to become independent enough to at least move out, you are going to have to teach them. YOU are really all your kid has, and listen, I know this topic can feel intimidating because maybe you feel like you don’t have all the answers yourself. But you don’t need a PhD in economics, you just need to learn this easy method to get them started. 

And let’s not forget; you’ve taught your young adult so many skills already. You’ve helped them to walk, talk, brush their teeth, tie their shoelaces, learn how ride a bike, maybe even a car, hopefully how to cook, make friends, and so on. Teaching them about money is just another step in preparing them for adulthood. Even if it’s just the basics. Any discussion is going to be better than nothing at all. 

 If you grew up in the same generation as I did, which was in the 60’s, then there’s a good chance you were raised feral. I joke around about this a lot, but there is truth in gest. I did not have parents who sat me down and talked to me about money. My siblings and I were left on our own to figure out how to save, budget, establish credit, invest. Some of us did okay and some of us didn’t. 

All I knew was this, my parents were terrible with money. My mother never worked, and was completely financially dependent on her husband’s plural, and my dad was always broke. So that’s all I needed to see, to want to do the exact opposite. I often say that our parents don’t have to be positive role models for us to learn from. Obviously it’s easier if they are, but quite often, we learn how NOT to be and what NOT to do from our parents. 

So this is how it began for me. When I was around 8 or 9 years of age, my family would ask me what I wanted for a birthday or holiday gift. So, I started saying “money”. 

I didn’t care how much; I just didn’t want them to buy me things anymore. I wanted to start saving. When I had more dollar bills than my piggy bank could hold, I told my mother I wanted to open up a bank account. When I was 11 years old, I started babysitting. When I turned 12, I got my first job delivering newspapers. And I have never stopped working since. 

 As my bank account grew, I started setting goals for myself. I saved for a stereo system and bought one. I saved for vacation to Europe and travelled there, I saved for my first car and bought it when I was 19 years old. 

 My motivation for learning about money was because I saw how my mother couldn’t buy anything without asking a man. And that made me feel not only sad for her, but I never wanted to be in that situation.

 Maybe you had something in your life that inspired you to want to earn and save. Maybe you have another child who has this instinct in them. But if one of your children does not seem to know how to do this, then let’s make sure they have the skills now.

Because, teaching your young adult how to manage money isn’t just about helping them save for the future. Money means much more than saving or spending.

Here’s an old story, a fable if you will, that I heard many years ago and never forgot. It really drives this point home. And it’s a good story to tell your kid.

Once upon a time, there was a wise old father who had 3 children. They were grown enough to start making their way in the world, but their father knew they still had much to learn. So, one day, he called them all together, and handed each of them the same amount of money and said; 

“I’m giving each of you $100. Use it however you think best, but in one year, I want you to come back and show me what you’ve done with it.” The siblings were excited, and each set off on their way, with their $100 in hand. And what they did with the money couldn’t have been more different.

The first sibling was so excited to finally have some money that they could hardly wait to spend it. “This is my chance to treat myself!” they thought.

They bought new clothes, went out to eat at their favorite restaurants, and even treated their friends. The money felt like freedom—a ticket to enjoy life.

 But as time past, the money began to run out. And in the end, this young adult’s wallet was empty, and they had nothing left to show for it except a few receipts and memories of fun nights out. Let’s call the first sibling, the Spender.

 The second sibling took a more cautious approach. They thought, I shouldn’t spend this money—I need to hold onto it!

They found a safe place to keep the $100 and tucked it away. They didn’t spend a single dollar. They figured the best way to protect their money was to leave it untouched. So they got a job instead. And so, for the entire year, the money stayed exactly where they had put it. In the end, they still had $100, but not a penny more. Let’s call the 2nd sibling, the Saver.

 The third sibling thought carefully about what to do. They wanted to make the money grow, but they weren’t sure how. Well, one day, while walking through the market, they noticed a farmer selling a young goat. The goat was healthy and could provide milk—milk that could be sold or used to make cheese. This sibling decided to spend their $100 on the goat, thinking it was an investment that could grow.

Over the year, the goat provided fresh milk every day, which the sibling sold at the market. When they had enough money, they bought a mate for the goat, and it produced babies, and before long, they had a small herd. They even started making and selling goat cheese. The sibling used the extra income to buy more supplies and by the end of the year, the third sibling didn’t just have $100—they had a thriving little business, a small herd of goats, and plenty of milk and cheese to enjoy and profit from. We will call the 3rd sibling, the Investor.

After a year, the father called his children back and asked them to share what they had done with their $100.

The first sibling shrugged and said, “I spent it all. It was fun while it lasted, but I don’t have anything left now.”  The second sibling proudly presented their $100 bill. “I didn’t lose a single cent,” they said. “I kept it safe the entire year.”

Then the third sibling came forward with stories of their goat farm. “I bought a goat, that gave me milk, and then cheese, which helped me earn enough to buy more goats. Now, I have a thriving business!”

The father smiled and turned to the first sibling. “Spending money isn’t wrong,” he said, “but if you spend it all, you’ll have nothing for the future.”  To the second sibling, he said, “Saving is wise, but money kept idle cannot grow.”  Finally, to the third sibling, he said, “You understood the true power of money—it’s not just for spending or saving; it’s a tool that can work for you and create wealth and opportunities.”

Each of the siblings’ choices reflect the decisions we all make with money. Some of us are spenders, some of us are savers, and some of us invest in ways that allow our money to grow and provide for us in the future. 

Your young adult should learn to see money as a resource, a tool that they can use to build something that will grow throughout their lifetime. This doesn’t mean that they have to start their own business. The point here is that money can be used to make more money, so investing it in a home, or blue-chip stocks, even a high interest savings account should be something that they are aware of. But that’s not for today.

Today, we’re going to get into a simple money management framework which I’ll call the 3-Step Money Plan because it focuses on 3 key, actionable steps that make up a solid foundation for money management. It’s easy to remember and to put into practice, even if you feel intimidated about money.

Step 1: This is the 50/30/20 Method, and it’s all about allocation of funds.

You’re going to explain to your young adult that every dollar they earn or receive should be divided into 3 categories: Needs, Wants and Savings, with percentages for each.

50% of their income is allocated to NEEDS. And when I say income, of course I’m referring to earned income, but when kids are young, this can include allowance or gift money.  Now, needs are considered the necessities or the essentials that we can’t live without, like rent, groceries, transportation, cell phone and so on. 

The next 30% is used for their Wants: These are the non-essentials, the Fun things like eating out with friends, entertainment, and anything that brings us joy. And finally…

20% is put aside for Savings or paying off debt. Here’s how you explain it in everyday terms. 

Imagine you earn $100. You’d use $50 for things you need, like food or gas if they drive, $30 will be for things you enjoy, like going to the movies, and the rest is what you save, leaving you $20 for your future. This division or allocation of funds enables you to cover your basic needs, enjoy life, and plan ahead, all at the same time.” 

Be sure to make this explanation visual. Write it out, or even grab three jars or envelopes and label them: Needs, Wants, and Savings.

Step 2: Create a Budget Together

Here’s where you’re going to break things down. If they don’t have a job, I would like you to consider giving them a small allowance. They will never learn about money if they don’t have any. And if you are not giving them allowance, that means they are coming to you every time they need or want something, so this is not teaching them anything. 

Okay, so now you write down their income—whether that’s money earned or an allowance.

Then, list all of their regular expenses, from daily to monthly. This is a great way for them to see how much they are actually spending, even it’s your money. 

Then use the 50/30/20 rule to allocate this income into the 3 categories; their needs, wants and savings.

You’ll come across some interesting scenarios. What if their Needs or expenses exceed the 50% limit? You’ll have to ask them, “What can you do to adjust that? Can you cut back on your Wants this month? Or find ways to earn a little extra money?” 

This concept teaches them the need for flexibility and creativity in managing money. When my daughter came to me and said she was ready to move out, this was the very first thing we had to do. Write out all of her living expenses, plus her wants and then she needed to save a little. It was then that she realized she needed a job. Which of course she got, otherwise she wasn’t moving out. 

Step 3: Build a Savings Plan 

Now that they’re saving 20% of their money, they’ll need to have a goal that excites them. Young adults are more likely to save when they have a clear purpose.

Ask them: “What’s something you’d really like to save for? A car? A vacation?” Determine what the value of that is and have them calculate how long it will take to reach their goal by saving 20% of their income.

Savings is where a lot of young adult’s struggle. Actually it’s where a lot of older adults’ struggle too. Because it’s hard to think about savings when every dollar feels like it’s already spoken for.

But it’s crucial to start, even if the amount is less than 20% in the beginning, because Saving money builds momentum. It requires discipline, but once they see their savings grow, it becomes a habit they’ll want to stick with.

This Money Management framework really works for Parents and their Young Adults

First, because it’s easy to explain. That 50/30/20 rule is not rocket-science.

2nd, it’s actionable: Sitting down to create a budget and savings goal can be done in under 60 minutes, maybe less.

And 3rd, it’s relatable: Teens and young adults can immediately apply this to their lives, whether it’s managing a summer job paycheck or their monthly allowance.

If you want a few suggestions as to how to broach the topic and get it started, I’d begin with this:

“Hey, I think it’s about time we talk about how to manage money. I know this might seem boring or even confusing, but it’s actually really simple. I’m going to show you a way to handle your money so you can pay for your needs, have fun and still save for the things you really want later on. It’s called the 50/30/20 rule.”

“We’ll split your money into three categories: Needs, Wants, and Savings. Then we’ll create a quick plan so you know exactly how much you can spend, save, and enjoy.”

“Let’s figure out a savings goal too—something you’re excited about! Once you see how this works, you’ll feel way more confident about managing your money.”

By the way, I’m not sure if you’re aware of this, but everything I say in my episodes is always available in a transcript which you can find below. So feel free to look at it after if you need a quick refresher.

What I love about the 3-step approach is that it’s flexible and realistic. It teaches young adults how to prioritize without feeling deprived. Plus, it’s easy to tweak as their income changes.

Here’s a few extra tips when you are ready to sit down with your young adult, because let’s be honest, they tend to tune us when they feel like they’re being lectured, so the key is to make this a conversation.

Start by sharing your own experiences. Be honest about the mistakes you’ve made or the things you wish you’d known earlier. For example, you could say, “I remember getting my first credit card and thinking, hey this feels like free money. I know for myself, I didn’t know the first thing about those interest charges. Let me tell you, that was a painful lesson.” 

Next, ask open-ended questions that would get them more engaged, like:

What’s something you’d love to save up for?”

How much do you think you’ll need to save to reach that goal?” 

And after you explain this model, ask them what they think about this 50/30/20 method? Does it seem doable?” 

These questions will get them thinking about money in ways they probably never thought of and also take ownership of their financial journey. Now, you’ll notice that this 3-step plan doesn’t include credit or investments, which I cover in my course, but in this episode I wanted to keep it easy and actionable.

As we come to a close, I want to remind you that your job isn’t to micromanage their finances. It’s to guide them and then let them start managing it on their own. That means watching them make a few mistakes along the way, but mistakes are often the best teachers.

So check in with them regularly—not to critique then, but for support. You could say, “Hey, how’s that budget working out for you? Is there anything you want to adjust?” This keeps the conversation open and collaborative. 

I hope you feel comfortable with this approach and that you are ready to sit down with your young adult and go through these 3 steps. Teaching money management is about giving them the tools to take control of their finances.  

And I want to remind you that this life skill is one of the greatest gifts you can give them. It’s not just about growing a bank account. It’s about building confidence, independence, and setting them up for success.  

Money touches every part of our lives, our needs and wants, our social life, career choices, our experiences, and even our mental and physical well-being. The stress alone of not having money or owing too much of it can be overwhelming.  

By teaching your young adult the basics of money management, you’re giving them a lifelong gift. You’re not just preparing them for rent payments or grocery runs—you’re setting them up for freedom, security, and the ability to create the life they want. 

As always, thank you for listening, and please feel free to reach out if you have questions or stories to share. I’d love to hear how your experience went.