10 Smart Money Tips for Teens
Very few of us our gifted with a natural prowess for moneymaking. For most of us, it is a learned process of a series of mistakes and successes that typically start in our teen years. Teenagers need their parents to teach them the foundations of being fiscally responsible as well as the basics of typical adult responsibilities like balancing your checkbook and making sure all your bills are paid on time. Teaching your kid to be money savvy now will help them navigate the adult world so much easier as he gets older. Give your child the best chance to succeed when they graduate into the real world.
Here are 10 smart money tips for teens:
Teach them the difference between wants and desires
Those new pair of hightop sneaks or that new video game. Our teens are bombarded every day with images of products they want so of course when they start getting access to money, the first thing they will want to do is spend, spend, spend. Teach your son or daughter how to tell the difference between necessities and the extras in life and the importance of building a savings instead of buying everything they see.
Help them set up a regular source of income. Whether it is from a weekly allowance or their first part-time job, a regular source of income is necessary to teach your child about money. If you are paying for everything, they will never really have a true appreciation for the value of a dollar. Set them up a checking account with a debit card NOT a credit card so they can learn how to pay bills and conserve money until their next check hits. A debit card will teach them the perils of too many electronic transactions in any given day without building a mound of debt like would happen with a credit card.
Show them how to write out checks
As adults we know how important it is to manage our money correctly and a big part of this is writing out checks and balancing the checkbook. Your child will never learn this until you show them how to do it. Don’t send them out into the world with basic financial survival skills or they will be back living on your couch faster than you can blink your eyes. They need to understand what happens when they don’t keep track of their spending.
Emphasize the importance of saving
Most teenagers don’t have a lot of expenses yet so they don’t think twice when they see something they want to buy. They will just pounce right on it. If they continue to live this way though, they will never have a savings built up to help in times of emergency or to pay for special treats like a family vacation to Disney World.
Don’t be afraid to be honest with your teenage about how you handle your own expenses. Show them a breakdown of where your money goes and discuss openly how you have to forgo that dinner out or that new pair of shoes to have money for their braces or to pay for a new water heater when the old one breaks down. They need to see all the decision making and sacrifice that goes into sticking to a budget.
Help your teen set goals
Encourage your teen to save up their money for special treats like a concert or a new dress or even braces if you can’t afford to pay for them yourself. They will appreciate these things more when they have to work hard and save for it. They will get a real appreciate of the value of a dollar.
Help them set up their first budget
As they are regularly bringing money in and starting to have some bills to pay, it is a good idea to help them create their first budget to follow. Make sure they understand not only the process of creating and following a budget but also the importance of sticking to it. Once they see a budget in action they will have a greater appreciation for it.
Emphasize the importance of being philanthropists
The most important lesson to teach your son or daughter is to be kind and generous to others and that means helping others less fortunate by giving a small donation or offering up your services. They need to see that even if you don’t have a lot of money yourself, there is always someone less fortunate than you are.
Let them learn from their mistakes
As parents we want to protect them at all costs, but when we constantly bail them out of problems especially financial problems, we are only doing them a disservice. Give them the tools they need, but then you need to step back and let them make mistakes and deal with the consequences. It is the only way they will truly learn.
Make them responsible for buying their own things
Once they are making their own money, you can start asking your teen to buy their own clothes, personal items and pay for any dinners out with friends or movies. You will still be handling the basics, the roof over their head, food on the table and doctor bills, but the more discretionary spending will be completely on them. This will help them prioritize how to spend their money as well as the importance of setting up and sticking to a budget. For example, if they want to go to the movies with friends on Friday then they shouldn’t buy that expensive new video game that will cost all the money you have left in your account.
Teach them how to spave
Share with your child the thrill of a good deal and teach them how to clip coupons and to shop only for items that are on sale. By seeing you in action and how much you really can save when you put your mind to it, will help inspire him or her to try it themselves.
As parents, it is our responsibility to give our kids the best tools to lead successful lives and that include financial tools. The better prepared they are, the more successful they will be. Don’t be afraid to honestly engage your child in important money talks.