Our son recently started a job working for Sheridan’s Frozen Custard (and boy is it good stuff!!) and we decided to get him on a budget. So his schedule isn’t the same every week, we decided to break his check down into percentages for various things.

First thing we did was ask him what categories he thought he should have and then we wrote up what categories we thought. He came up with four:

1. Pay Parents (he owes us some money) - 25%
2. Savings - 40%
3. Cash - 25%
4. Car - 10%

Not bad and I was a little surprised that he would dedicate 40% to savings. I came up with a bit more:

1. Pay Parents - 40%
2. Retirement - 10%
3. Long term savings - 20%
4. Short term savings - 15%
5. Cash - 15%

In describing the long term vs. short term, I suggested that short term should be for things that would take 1-3 months to save for. This would give him a short term goal that he could see easily yet would be a nice size item, like say a new XBox or whatever. Long term would be for a car, school, etc.

With regard to paying us back, I suggested that as soon as we are paid, then he can apply that money to the long term, short term and a little more to cash. This would show him the benefit of paying off a debt and then applying the money to other things, some of which would be immediate –cash– others would be long term.

The retirement I pretty much mandated. I based the percentage on approximately $50 a month and when it gets to a certain point I’ll teach him about IRAs and such. I may go ahead and open on for him for the $500 or so that it takes just to get it open, then after I’m paid off for that, apply his money to it every month. He is fairly good at math so for the short term I’m hoping that showing him how it will grow will get him excited enough that he won’t try to ask for it, then after that wears off he will just be used to it that he keeps putting in $50 or so for the next 50 years or whatever.

We’ll see how it goes…

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