I am sure your child is spending too much, even if he earns for himself, he is spending them all in no time. That’s the story of all the houses and that’s when the question arises of how do I teach my teenager to manage money? Since they are been given or paid money, it becomes compulsory for them to spend it right there.
Especially, when it comes to going out with friends, they feel like the richest person in the world who buys their friends’ food, gifts and take them out in restaurants, and some teens spend almost money on buying clothes or shoes. I don’t get this love for clothes and shoes since I, myself, am crazy for them.
That is why, parents find it challenging to approach their teen to have an honest and open conversation with them; one of which is talking to them about handling finances. Whether they are seeking jobs, in schools or pursuing a degree. As they step into the real world, teaching teens manage money becomes one of the most valuable lessons.
Well, don’t worry we have covered the 7 tips that would help you teach your teen to manage money.
How Do I Teach My Teenager To Manage Money?
1. Set a budget
Tell them about the family budgeting system, share your realities with them, make them aware of financial concepts. Even if they are earning less or saving their pocket money.
You can also do it by explaining to them the key concepts of finances, that includes, daily/monthly expenses, personal spending and savings. You can teach your teen budgeting at any age very easily.
For example, you can consider giving them tasks, calculate the budget or ask them to maintain a book that accounts for all their finances.
2. Talk about Credit/Debit cards
Initially, the idea can be scary but it also offers convenience. You can help your teen establish a good credit/debit card history so when the necessity comes he can qualify for loans, for a job, or can even rent out an apartment. If he/she is still in school, you can get a low limit cards, as parents monitor their monthly expenses. Basically, guide them throughout the process.
3. Teach them about compound interest
Things get tricky when it comes to compound interest. Here, compound Interest plays a crucial part. You can demonstrate the method by showing them how even a small amount of money can grow. Like for every 10 cents in the bowl, you add a cent, so then it’s 10% interest. What they need to learn is to be smart with their money, see how they can earn a good amount of money in some time.
4. Set goals
Guide your teen to set their financial goals. Help them figure out what matters and what is not practical. Usually, teens learn a strategy early in school life called the “SMART” strategy, that can be applied in money management too. Address their concerns and make a realistic budget for them. When you make one, make sure they also live by it.
5. Check on their financial statements
While they are planning, analyzing their budget, what income they have, where are they spending and how much are they saving from it. Check on their account statements, check for details and errors.
Understand their behavioral pattern, make changes if required. Let them know you’ll always be there for them. Make sure you fit rightly into them to spend less and save more.
6. Help them find a job
Job hunting for teens can be much of a task if nothing else. Sometimes, teens cannot face rejection and become halfhearted. Here, parents need to play an important role. Share your first job experience with them, your ideas, suggestions, judgments, give them feedback. Make them ready to face real-life situations. You can’t always be with them so let them solve their problems. This will make them feel confident and help them establish their identity.
7. Concept of borrowing and lending
As far as money management is concerned, borrowing and lending of money is also a key concept. How do I teach my teenager to manage money involves repaying also. If they have borrowed some amount from their friends or mates then they should be responsible enough to pay it back to them. Supposedly, if they have lent someone some amount then teach them about to agree on a repayment plan, so they don’t regret later.
Why is it important to teach teens to manage money?
This skill is very critical and significant to live a hustle free life and avoid financial stability for your teens. If you can teach your teenager to manage money at the right time, they can easily save their today and tomorrow effectively and efficiently. Drive your teens towards a better financially independent future. Here is why it is so important.
1. For contentment and gratification
Show contentment for what you have and don’t spend more than you earn – This is what they need to learn and remember always. When you teach your teenager to manage money, teach them about contentment and gratification, it will support them become disciplined. If they want something then teach them to save for it, rather depend on you for their wants and luxury.
2. For Accountability
When your teen gets everything from you without restrictions on their unnecessary demands they may not understand the depth of it. Teens don’t realize where the money comes from, so they just spend lavishly without thinking twice.
However, as they grow they will be inclined to make financial decisions, if you start early and educate them they can prevent financial instability and spend wisely and responsibly.
3. For planning
While your teens learn the art of money management, savings for the future can be beneficial for many things, not always to fulfill your needs and necessities but also to enjoy your life to the fullest. Funds you save today will be fruitful tomorrow. Also, you’ll always be independent and ready.
The more you educate them at an early stage the better they will learn and maintain good money management habits. While they begin to earn their first income they will understand the concept and prepare themselves to support their family. Poor money management skills can not only make them struggle throughout their lives but also stop them from succeeding and push them towards failure.
Money management skill is one such skill that you’ll learn throughout your life and will always give you new experiences. So, encourage them and try to involve them as much as you can.