When it comes to teenagers and money, they are pretty much limited to the aspect of spending it. Parents play a key role in helping them develop out of that mindset by teaching them about personal finance and money management. This will help them make smarter decisions when they head out to college or move out on their own.
Below are 11 money money management tips to discuss with your teenager.
1. Help them achieve a steady income
Learning to manage their money is a key part of teaching kids about personal finance. In order to get them learning, help them establish a steady income. Have them start applying for jobs or start giving them an allowance.
2. Have them spend only “their” money
When your teenager starts bringing in an income from a job or an allowance, they should start covering their own personal expenses. Doing so will teach them that they need to watch how much they spend and to stay within their budget.
3. Open a savings and checking account
The next step is to open a savings and/or checking account for them. They should make their own deposits, keep their account balanced to avoid overdraft fees and of course save their money. While you are at it, you should also introduce them to ATMs and online banking.
4. Show them how to create a budget
Helping your teenager put together a budget is one of the best things you can do for them. They will learn that spending money haphazardly will not help them reach their financial goals.
5. Talk about the importance of savings
Saving is an essential part of teaching proper money management. 5-10 percent of their income should go towards saving. Explain to them how saving money now will lend itself to less financial worries down the road.
6. Teach them about saving when shopping
Shopping presents another great opportunity to teach your teenager tips on how to save when they go grocery shopping or to the mall. Help them search out the lowest price so they know they are getting the best value possible. There are tons of coupon apps and websites to show them. Now would also be a good time to talk about delayed gratification by waiting for something to go on sale or giving it at least 30 days before making a purchase as they may find they no longer want the item.
7. Spend less
Spending less is always a good idea. Show your teenager how spending $20 instead of $30 dollars on a dinner out will add $10 dollars to their savings. Better yet, show them how it can be just as fun to have a night in.
8. Make a list
Making a list prior to going out shopping is a good idea to pass on to your teenager. This will teach them about avoiding impulse buys which leads to breaking the budget and things they may not even need.
9. Set financial goals
It’s very important to discuss what goals your teenager envisions for themselves in the future. At their age, a car is probably the first thing on their list and they should pay for it. That would be an added line on the budget sheet. Exposing them to goal setting at this age shows them both vision and patience. Two very important things they will need in life.
10. Go over their financial statements
Each month your teenager should be reviewing their financial statements for their savings or checking accounts. This will help them to evaluate how they spend their money and in turn make any changes necessary to lessen spending and boost savings.
11. Talk about household finances
Giving a glimpse into your household finances is a great way to show your teenager the larger picture of personal finance. Discuss how much income is coming in and how you go about managing your monthly expenses along with daily costs, saving for retirement and a rainy day.