If you parent a teenager, you know that nothing comes easy to today’s generation of teens. You have to teach them the value of money and money management early on. You have to inculcate the habit of personal savings as early as possible. Right from helping them understand the importance of financial management to helping them open a bank account to save money and invest, everything falls on your shoulders as a caregiver.
Teenagers mostly get the money they have from their parents in the form of an allowance. Some parents also pay out of pocket for the things their teens want. However, there are definite skills that can help your teens start off with building their personal savings, before they leave your nest and go off on their own.
Here are a few such tips to get your teenagers started on the path of responsible money management:
1. Be frank about your family’s income and expenses
As teenagers, your kids may have no idea about what the monthly income of your family actually is and what the living costs actually are. It is important to educate them on this aspect before they learn the concept of personal savings. Share actual numbers with your children. Show them how to prioritize the available money between spending on “needs” and “wants” by clearly distinguishing between the two.
2. Open a bank account for them
If your teenager is working and getting a regular or part time paycheck, it’s high time you open a bank account for them. Involve them in the entire process. Discuss with them before choosing a bank. Teach them that a debit card (that comes with the bank account) is a huge responsibility and should not be misused. Moreover, show them how to use the different online tools available to check their account balance periodically.
3. Review monthly statements with them
Initially, it is a good idea to review the monthly account statements together. This should be done not to criticize their spending, but to have a frank and open discussion on their spending patterns and opportunity for improvements. Encourage your teen to keep a daily record of their expenditures. Moreover, encourage them to avoid getting into personal debt.
4. Help them create a savings plan
If there is something that your teenager has been aspiring to own, such as a car, a new phone, or a concert ticket, help them to make a personal savings plan. Decide on what amount they will have to put aside, over how many months or years to achieve the desired outcome. Encourage them to set monthly goals of saving a certain amount.
5. Start with a little responsibility
Start giving your teenagers small financial responsibilities each month. Let them handle their smartphone bills, entertainment subscriptions, and etc. It will help teach them strategize their spending habits and set a monthly budget, which will benefit them later in life.
6. Teach them to use credit cards with caution
If your teenager has just gotten a credit card, he/she will feel like they have wings. You have to help them understand the benefits of having good credit. Also caution them about the evils of credit card debts and how easy it is to fall into the rut.
It is never too early to start educating your teenagers about money. Budgeting is not exactly a cakewalk. Your teenagers will be grateful to have some money management skills once they go off on their own. Good money habits like budgeting and saving, if taught well and implemented diligently, can benefit them for a lifetime. It is best if you lead by example and help them practice what you preach.