10 Oct How to Help Your Teen Manage Money
While we don’t keep our money in piggy banks anymore, the practice of saving money is more important than ever, now that we have more expenses to account for. Many teens have part-time jobs, so we need to teach our kids how to be smart with their funds. Here are some ways you can help your teen become financially responsible.
Teach Your Teen the Basics
Kids don’t always get the opportunity to develop financial skills in school, so take some time to share the basics with them. Keep it simple or else they might get confused. Explain how checking and savings accounts work before you help them open a personal account. You should also describe the importance of credit and paying your bills on time so you don’t collect interest. Make sure you brush up on this stuff yourself so you can answer any questions your teen may have.
Let Them Be Responsible for Their Own Money
Image Credit: Martin Vorel
Of course, the best way for teens to learn about handling money is to give them the responsibility of managing their own funds. They’ll realize how quickly money can burn a hole in our pockets and that it’s necessary to keep track of how much we spend, where we spend it and on what. Once they run out of cash, don’t help them out by giving them more—they need to learn how to handle the amount they have and/or make.
Be a Role Model
If your teen sees you spend your money on frivolous purchases, they’re going to assume it’s acceptable to spend their money the same way. If you want them to start properly saving, tell them what some of your past investments have been and what you’re saving up for now. By demonstrating a mature and thoughtful approach to finances, you’ll show your teen how they can do the same.
Budget vs. Earnings
If your teen has a part-time job, have a conversation with them about what they should be doing with their money. Maybe a large portion of it will go into a college fund or a small percentage will be set aside for “special” purchases. Also decide (perhaps on your own first) if and how much of an allowance or budget you’re going to give your teen. If you plan to give them a budget, make sure you establish rules for what that money will be used for, such as necessary things like school lunches or new clothes.
A little goes a long way—if your teen starts saving now, they’ll have plenty in the bank for when they truly need it. By understanding the importance of being financially responsible, your teen will be more successful in how they manage their money.
Feature Image: Luis Llerena