Compared to the rest of the troubles of teenage life, money management can seem insignificant. However, it is good to get your teens learning young so they can be prepared for a lifetime of financial success. Here are some of our best ways to start teaching your teens about money.
Open a Bank Account for Them
When teaching your teens about money one of the first things to do is introduce them to banking with their own bank account. Try looking for a teen checking account that allows for no minimum balance so they can open with just a few dollars.
Having a bank account gives your teen a place to put their money and allows for any employers to pay them directly when they get their first job.
Most importantly it lets them feel like an adult, it’s a big step up from the piggy bank in their bedroom after all, and if you want to get your teenager to treat money like a fiscally responsible adult you’ve first got to treat them as such.
Give Them Financial Responsibility
One of the best ways to teach your teens about money is to give them practical experience managing their own.
Give your teen a weekly allowance and make it clear that the next time they want something, they are going to have to buy it with their own money (or at least contribute).
Knowing the worth of money is a valuable tool for your teen to grasp and may give them pause the next time they want to buy an expensive item.
Better yet give your teen tasks, like cleaning the dishes or mowing the lawn for them to earn their allowance and prepare for their first job.
Help Them Budget
As they get older, one of the best skills your teen can have in their arsenal is the ability to create and manage a budget for themselves.
Firstly, give your teen insight into the family budget. Talk to them about your income and the things you need to budget for such as groceries, bills, and anything you spend on them such as school uniforms and lunches. This will give your teen a grasp of the foundations of a budget and the types of things to save for.
Next, create a simplified version of a budget for your teens’ personal use. A good way to split this is 50% going on essentials such as food, 20% on personal spending, and 30% on savings. (Encouraging your teen to save for the likes of college or their first car is a good example).
A lot of teens struggle with money when they first become independent, for example during their college years, and often rely on the bank of mum and dad to keep them afloat. So, teaching your teen to manage their own budget now will set them up nicely for financial independence in the long run.
Teach Them About Consequences
Lastly, give your teen room to make mistakes. If they overspend one month do not bail them out and make sure they only dip into their savings in an emergency. Instead let them know that they will have to cut back somewhere the next month, such as going to the cinema with friends, to make up for it.
Financial freedom goes both ways, and your teen needs to learn the hard way about the consequences of overreaching with their money.