Tips for Teaching Your Teenager Money Management and Budgeting Skills
As the parent of a teenager, you already know that nothing comes easy. That’s why it’s essential to teach them about money management early on in their lives.
The last thing you want is your child heading off to college or moving out on their own, only to find they’re constantly borrowing money from you because they have no idea how to make it on their own.
If you teach them the right way to think about their finances, then they should be able to survive. There are quite a few ways out there to teach your teenagers the skills they need. We’ll let you in on a few of the tips we’ve discovered.
Be Open and Honest About Money
While you want to shelter your kids from any money issues the family might have when they’re too young, you need to start being honest as they get older. No teenager needs to go out on their own looking at the world through rose-colored glasses.
Teenagers are famous for wasting money, so you might want to start with an open, honest conversation right there.
Start With a Loan
Chances are when you started building your credit, you started with a small personal loan. The lessons that come with these financial tools can be taught to teens even before they are old enough to have a credit score of their own.
The best way to teach money responsibility to a teen is for them to actually have responsibility. Decide on an amount and give your teenager his or her own personal loan from the Bank of Mom. Then, sit down, draw up a contract — with interest — and give them a set monthly payment plan to pay you back.
Of course, you’re not going to want to loan them money that they can’t pay back, so…
Let Them Get a Part-Time Job
While you want your kids to be kids and enjoy childhood as long as they can, it’s still a good idea to let your teenager get a part-time job while they’re still in school. Whether it’s childcare, working in retail, or working a few hours a week at the local fast-food restaurant, it’ll teach them responsibility and let them make their own money at the same time.
However, as a responsible parent, you don’t want them to put their job over quality education. If you find that their grades start slipping and they can’t do both, then the job needs to be the thing to go.
A Needs vs. Wants List
Sitting down with your kids and making out a needs vs. wants list can go a long way towards teaching them financial responsibility. You’d be surprised at the teenagers, and some adults, that don’t know the difference.
Sit down with your teenager and have him create his own needs and wants list. See what he comes up with, then adjust it from there.
Create a Budget Together
As much as adults hate them, a budget is a way of life for most people in the real world. Learning to create and stick to a budget early in life is the best way to succeed when you’re out on your own. Sit down with your teen and create a budget together.
Show him how you do it for your family, then let him create a budget for his own needs and wants. This exercise will teach him financial responsibility, how to create his own budget, and give you time together as well.
In today’s challenging and uncertain economic times, it’s more important than ever that your teenager be able to make it on their own. With your help and the right tips, that’s exactly what they’ll do, and probably surprise you along the way.
