Dread talking to your teenager about money? Don't worry. We've got you. Here are 6 ways how to teach your teen about all things money.
Parenting isn't easy. Especially when your child turns a teenager. You either look forward or dread these few years. No matter what side you're on, you know you've got to help your kid in matters which are important for them now. One such important aspect is to teach your teenager about money
Your teenager is growing, undoubtedly itching for independence. It's the age where they spend more time on their own than at home.
Hence, they will also start making crucial financial decisions.
Assist them in learning the importance of money. How to earn it, save it, and respect it. Here are a few topics you can start with:
- Difference between Wants vs. Needs
Your teen might say to you, "I need the latest smartphone, the latest video game." Ask them "Why do you believe it's a necessity?" Be prepared for a well-thought-out answer.
While your teen may have valid reasons for calling something a need, remain firm.
Give them examples when explaining the difference between needs and wants.
If you keep fulfilling their wants, it might not appear like a problem at first, but once it becomes a habit and feels like a need, that's where clashes will arise.
But you also don't want to deliver the message to your child that their desires are unimportant.
Give them the option to open a savings account to save up money for their wants.
- Set up their Bank Account
Setting up your teenager's first bank account is a turning point in their life, just like losing a tooth or learning to drive.
They've most likely outgrown the piggy bank they received for their first birthday. That means it's time to open a genuine bank account, right?
You can create a joint account as they are still minor. Or you can become the account's signer so you can monitor their spending habits.
This is an excellent chance to educate them how to reconcile their accounts, track their spending, and save.
- Managing their Money
If you've set up a savings account for your child, give them control at this age.
Assist them in developing regular saving habits, and talk about when or why you might need to dip into your savings.
Children learn from their parents, so make sure you've got the right saving and investing habits which they can pick up.
Set an example for them. Share your own saving tips with them. Explore how you can start saving money without burning a hole in your pocket.
- Creating and Managing a Budget
Teach your kids how to develop and maintain a budget. Instill in them that budgeting is not the same as riding a bike (don't learn it once and then forget about it).
Ask them to keep a track of all their savings and spendings.
Show them your budget and assist them in creating the first iterations of their own.
Since they are anyway glued to their mobile, why not get them on a simple budgeting app?
- Understand the Impact of Debt
Your teen isn't old enough to hold a credit card or apply for a loan yet, but in a few years, they will be.
Take the time to show your child how much money you're spending on debt and why you have it.
If your child is heading to college once they turn 18, make sure they are aware of the true cost of debt before applying for any loan (student loan specifically) or credit card anywhere for anything. Assist them in comprehending the terms of their offers.
Additionally, have a talk with them about internships, jobs, paycheck and taxes.
- Giving
You can't go wrong with giving, right? While it is necessary to earn, save, and spend money, it is also important to help others who are less fortunate or are in need.
One of the nicest things you can do for your teen is to teach them to appreciate and understand the power of giving.
Explain to them why they should donate money with their allowance or other earnings.
When you teach your children the value of giving at a young age, they'll remember how good it feels and (hopefully) carry on the tradition when they manage their own cash.
Hope these few initiatives help your teenager save money for college, plan for emergencies, and perhaps get a jump start on investing from an early age.
Don't worry if they don't get it right away. They will definitely thank you later for building a strong financial foundation in their early years.
Do check out how you can start a conversation about money with your kids (Ages 3 to 13).
