How To Teach Your Teens Good Financial Habitsby Chris S. Writer
Financial literacy is more important than ever, but it's a life skill that many people could still do with some lessons on, particularly teenagers who may be accustomed to parents supplying and managing all of their funds. As they prepare to leave the nest and become more financially independent, some aspects of real life can come as quite a shock – you have to pay for waste water?! And car insurance costs HOW much?
As parents, it is our job to prepare our children to be ready for the real world, including instilling some monetary common sense in them while they are young enough for their decisions not to have such a serious impact yet, giving them the chance to learn valuable lessons for later when they do matter. Continue reading for some starting points to help you raise a financially-savvy teen!
Give or help enable a degree of financial independence
There’s no better way to teach financial sense than by letting them experience having their own money to manage: either in the form of pocket money or by encouraging them to find a part-time job or other source of income such as tutoring or babysitting once they are old enough.
For pocket money, if you aren't doing this already, link their pocket money to helping you out – be it with household chores, helping a sibling with their homework or even helping you keep tabs on the monthly accounts! This way they will understand from an early age that money is in fact earned rather than something a person is entitled to. It is also worth considering paying this money monthly, as it will mean they are in charge of a lump sum which they have to make last for a longer time period – a great early lesson in budgeting!
Empower them to actively plan and monitor their funds
There are many children’s' bank accounts and even debit/top-up cards on the market now, but the best way to give teens full freedom and let them learn by themselves is to give them their own account and put them in charge. (Having a proper bank account for a number of years will also benefit them in the longer term for their credit rating, and because it becomes harder to open accounts with new banks without switching as you grow older).
Gone are the days of monthly or even quarterly paper statements, and it's easy to view account balances at the tap of a finger or click of a mouse. Many banks now have clever features and apps which allow teens to keep an eye on their spending in the way they're used to managing their lives – using their mobile phones! Encourage them to habitually check how much money they have available and to work out regular outgoings – their monthly phone bills, or perhaps even driving lessons – to calculate how much will be left to spend on fun, i.e. socialising or non-essential items, for the month.
Encourage them to save – both in the short and longer term
Particularly if you are the one supplying the income, is a good idea to play the parent card and ensure that teenagers also put some of their earnings aside – into a savings account for university, for example. Encouraging teens to plan more long-term can be tricky, however, so if you are in a position to, perhaps you can offer to match or contribute a certain amount for each month they pay in. Consider sitting down with them and demonstrating the value of long-term saving by showing them an online compound interest calculator, since teens are almost adults and can be reasonable, mature people too (most of the time!)
Further incentivise saving by helping them decide on a goal such as a trip abroad or their first car. Hopefully by starting this habit with an end reward in sight, they will not only experience the satisfaction of finally getting their hands on something they've worked hard for, but also continue to put money aside even after this goal has been achieved. Even if you can afford to buy them their first car or fund other major expenses, something saved for can feel so much more valuable since hours and months of work went towards it.
Teach them the value of money by getting them involved in more "grownup" finances
Giving your offspring pocket money is a great way to start teaching them about money from a young age, but as they get older it's a good idea to start including them in the types of decisions they will have to make once they move out – for example asking for help to think of ways to reduce energy bills, and getting their input on major purchases such as appliances or cars by researching and comparing prices and features with you.
Allow them to take an active part in household budgeting by challenging them to stay within the weekly grocery budget on a shopping trip or giving them their own money to manage to buy school clothes or stationery supplies. Even starting small and giving them the freedom to be fully in charge of their lunch money can teach valuable but low-risk lessons: having to bring sandwiches from home if they blew their budget quickly demonstrates that their financial decisions have consequences.
Finally, inspire them to educate themselves further and keep learning
“It is not what you do for your children, but what you have taught them to do for themselves that will make them successful human beings.” – Ann LandersThese are just some financial lessons to consider educating your teen about. Encourage them to continue to learn more, to find their own tips and tricks, and to seek advice when they need it. By teaching them to think more independently from a young age, instead of sheltering your children, you are preparing them to venture out into the real world as ready as possible.
Created on Sep 5th 2017 04:23. Viewed 854 times.