Sometimes, it’s hard as parents to watch your teens squander their allowance or money they’ve earned from a job. You want them to do better, but how do you teach them? Or maybe you are just beginning with the basics of money management, and you want to make sure they get off to a good start. Wherever you are in the financial training process, it’s good to have some tips on how to begin teaching teens money management.
Teaching teens money management isn’t extremely difficult, but it will involve a little willpower on your part as a parent.
Implement an Allowance
You may already be doing this, but need some tips on how to help your teen save and control his or her money. (If so, read on for more tips.) If you’re not giving your teen an allowance, go ahead and start. There’s no better way to learn how to handle money than handling money! Come up with a set amount that your child can earn for particular chores in and around the house.
As you begin the allowance – or if you’ve already started one and need to get a handle on things – sit down with your teen and make your expectations clear. One possibility is to require the first 10% of the allowance or income to be donated to charitable cause(s) of your/their choice, 40% saved, and 50% for spending (always with an option to save).
Of course, this will depend on the amount and frequency of the allowance, and also on your personal family dynamic. The point is to give your teen money on a regular basis, while requiring specific discipline about handling it. This sets the stage for responsible budgeting later in life and really works well in teaching teens money management. In fact, you might want to create a budget along with your teen to help manage his or her allowance “income” (or actual job income).
Let Consequences Happen
We parents often want our kids to be happy no matter what, and out of sympathy we might be tempted to bail them out if they’ve been irresponsible and spent their money too fast. But consequences are powerful learning tools, and it’s better that they learn about the consequences of mishandling money while living under your roof than when they’re out on their own with more at stake.
So within reason, let your kids take the consequences for their spending habits – once the money’s gone, it’s gone until next allowance or payday.
Teen Business Web Sites
There are sites springing up all over the internet for teens who want to earn money. These sites often have financial advice as well, and message boards and forums. Your teen can sign up with one of these and learn a lot about entrepreneurship, what jobs are currently available. What better way to begin teaching teens money management than to have them manage his or her money. Such sites can be invaluable resources for teens who want to start earning.
Let Your Teen Pay for Certain Things Him/Herself
As you create your teen’s budget and lay down your expectations for his or her spending, it’s a good idea to make it clear what you will pay for and what your teen will pay for. For instance, you might make up a list with two columns – things parents are responsible for and things your teen is responsible for funding.
Parents may pay for necessary clothes, school supplies, and food, while teens may be responsible for paying for movies, video games, and “accessories” (such as special t-shirts and jewelry).
The above tips will really put you on the right path when it comes to teaching teens money management. It is important to protect your child from graduating book smart but money dumb to help them avoid debt, financial stress and paycheck-to-paycheck living. Give your child the gift of MoneySmarts for a lifetime of financial Intelligence, Independence, Security and Success!