How To Manage A Teen Clothing Budget

Parents often ask me how to teach teens budgeting basics. My favorite approach takes a page from the envelope budgeting system playbook, but with a digital twist.

In the traditional envelope system, each category of spending has its own labeled envelope stuffed with the budgeted allocation of cash for the month. Purchases must be funded with the cash from the appropriate envelope. So, all clothing purchases come out of the envelope labeled “clothing”. Super simple.

For the digital twist, replace cash-stuffed envelopes with automatically loaded FamZoo cards. So, all clothing purchases come out of the card labeled “clothing”. Still super simple. And it works in today’s online world where cash is no longer welcome.

When introducing teens to budgeting, I recommend keeping things narrowly focused. No need to overwhelm. Start by choosing just one envelope outside of everyday spending. Clothing is typically an excellent choice for teens.

Here’s how to get your system up and running:

1. Set up a clothing envelope. Establish a dedicated subaccount for clothing purchases by adding an additional card for your teen with “Clothing” on the label. A physical card just comes along for the ride with every prepaid subaccount. Your teen doesn’t have to use it directly (see step 3 below).

   Note: adding a card does not change your subscription fee. Your FamZoo subscription covers the whole family and any number of cards within your family.

   Pro tip: activate your additional card immediately after ordering so you can see it right away within your online account and get started on the next step.

2. Set the budget. How big should the budget be? I recommend letting your teen do the initial math in a budget worksheet. This step alone will be a valuable eye-opening experience for your teen. Who knew clothing could be so expensive? Iterate to arrive at a reasonable number. Swap designer brands for budget brands. Add overlooked necessities. Underwear anyone? 🤣

   With the agreed-upon number in hand, create a clothing allowance that automatically delivers the right amount to the clothing card each week, month, or year.

3. Spend within the budget. The current balance on the clothing card represents the remaining budget available to spend.

   There are two ways your teen can spend against the budget:

   1. Use the clothing card directly for clothing purchases.
   2. Use their everyday spending card for clothing purchases and request transfers from the clothing card to cover or reimburse budgeted expenses.

   I prefer the second. It:

   • Reduces the number of cards in your teens wallet — no chance of losing an “envelope”.
   • Gracefully handles the case of a compound purchase where part is clothing (or within budget) and part isn’t — just reimburse the part that is.
   • Encourages your teen to maintain a healthy balance on their spending card — a good financial habit.

So, what happens to any money left over in the envelope at the end of the month? Is it a bonus transferred to everyday spending? Does it stay in the envelope and roll over to the next month? Is it use-it-or-lose-it and pulled back to the parent card? Your call.

My vote? Rollover to the next month, but deliver a final balloon bonus if any remains upon FamZoo “graduation”. That’s what a teen deserves for earning their budgeting degree with honors.