For most teenagers, learning about how to handle their money isn’t one of their top priorities as to them, it’s all about having fun and being young. Teaching your teenager how to handle and manage their money is one of the essential life lessons that need to be done, early on.
Whilst traditional schooling enables students to learn how to calculate and mathematize, it does not necessarily teach them how to budget and deal with income and expenses. Managing your expenses and understanding the effect of your spending is critical for everyone- regardless of age.
So how do you teach your kids how to be smart with their money?
Teach them how to budget
You first need to learn how your teenage daughter or son is using their money. It could be more of spying on them on how they are spending their money or even trying to track their expenses. I can assure you that no teen will be grateful to you for doing this, especially if they find out what you’re doing. The best approach to this is, to be honest, and upfront with them. Sit them down and ask them how they spend their money.
If they cannot breakdown where and what they are spending their money on, then it’s time to explain the concept of budgeting. Start by introducing the idea of a budget. Explain what budgeting is and how it can be useful to their life.
Show them how they don’t have to spend their money to the last penny. Consider telling them things they could avoid for them to save themselves some cash. You need to state to them that once you give them some money for a given period, you are not chipping in until the period is over unless things are totally out of order. Make sure they know that their budget is theirs.
Consider the use of a budgeting calculator. Budgeting calculators can open up the idea of saving money. It’s all about setting the foundations early on – get your kids thinking about saving and it will transfer into their adulthood. These calculators will allow them to interact with income and expenses.
Set the right example
Most children will always emulate and do things they learn from their parents. In parenting, you have to set the right model for your child. You can’t go on teaching your child about bad credits while you have spent most of your time trying to run away from debt collectors. Your child will tend to save most of their money if that’s what their parents are doing. Try to keep financial issues away from your children. Whilst it is important to understand the realities and difficulties of life, sometimes it is better to set a positive foundation early on.
A large number of teenagers today know how to use credit cards. However, what they know about credit cards and the truth about them is different. Most teens tend to see credit cards as a source of free or easy money. They fail to realize the interest rates, and the money they have to pay back could be a risk for them. Most teens go borrowing from these creditors only to fail to pay and think it’s all fun.
More recently we have seen the rise of buy now pay later services such as Afterpay. These services are paving a negative path for teenagers who can access what they want even quicker. It is super important to teach your kid all about borrowing money, regardless of the form. If it is a credit card, make sure they are aware of the implications it can have on their credit reports as well as credit score. In saying so, open the idea of a credit report early on so they are at least receptive to the idea. A story is often the best way to communicate this message. Explain to them how these debts can be a risk to their life unless they get help from a credit repair company.
Some fortunate teens tend to rely on parents for everything, as that’s the only way they know they can get money. The little pocket money and allowances you give them may not be enough, and hence you need to teach them on better ways to get themselves some income even when they’re still learning.
With the digital era and the internet being cheap and available for everyone, there is ample opportunity for teenagers to make an income. Teach them about how it feels good to work and get to spend your own money and the pride it brings for someone.
You could give them a list of websites that pay to earn an income, and they could choose whatever they like or want to do. Whether it’s retail, hospitality or even construction there are many part-time options available for teenagers.
Now that your kid has some means to start earning their own money, how about teaching them how to save? Teach them how keeping $5 out of their 25 dollars making can help them. Tell them not all days are sunny days, and they need to save for that one rainy day. You could even teach them to save for a project they want to start as savings could be the key to their success.
How to manage money well, saving for a good future, and how maintaining good credit history is best for their life are some of the best life lessons you can offer to teens as a parent.
To bring out a responsible adult, you will need to teach your kids how to handle their money well. Don’t let your child lament later in life for how they managed their money and budgets in their teenage years.
Good money habits can make them have all they desire for life, but with lousy money habits, this might be just another dream.