Here is a comprehensive guide on money management for teens. Parents need to understand that providing financial literacy for teens sets these kids up to become financially stable adults. Schools score low on finance for teen sensitization, as they don’t offer lessons on managing money as a student. Similarly, peer influence cannot be allowed to take the reins.
So, here we highlight the primary steps all parents should take to prepare their children for a healthy relationship with money.
Money Management for Teens: Essential Tips
The following are tips to help teens manage their money better:
1. Teach Money Lessons That Correspond to a Teen’s Development Phase
Adolescence is a period of youthful development that comes with various forms of dysphoria; shifting financial habits is one of them. So, parents should take advantage of this period to teach their teenagers financial responsibility.
Permit them to make financial decisions, good or bad, without interference. Instead of barking out opinions, have open discussions about how they could best navigate financial crises.
2. Cut Teens Some Financial Slack
The average teen will not learn how to manage money when parents choose to breathe down their necks for every transaction. So, provide your kids with dosed amounts of financial freedom.
Giving your teen an allowance without interfering with how the funds are appropriated is an excellent place to start. You may also need to expose your child to various offline and online spending channels.
3. Help Them Relate Productive Contribution to Remuneration
After providing your teen with a regular streak of allowances, watch out for a play out of entitlement. With or without the manifestation of this trait, let your kid understand the implications of money mismanagement.
For example, if a child exhausts the provided allowance on non-essentials, help them understand the implications of overspending. Also, encourage your child to earn some extra money by helping around the house or getting a job like newspaper delivery.
4. Explain the Significance of a Paycheck
Once your teen is old enough to work a paid job, walk them through the contents of their paycheck. Parents are responsible for helping teens understand their first paycheck.
Depending on whether the paycheck is digital or physical, teach your teen the importance of proper documentation. In adulthood, teens may need to present their payslips when applying for credit as proof of earnings.
5. Teach Them the Importance of Setting Spending Priorities
Conflicting wants and needs will often present themselves before your teen. It is your responsibility as a parent to help these young chaps establish sound financial priorities.
Kids often fall into the trap of product marketing and lusting after every new gizmo that presents itself in an ad. Teach that child how to differentiate wants from needs.
6. Show Them How It’s Done, by Example
Don’t be a taskmaster to your child, teaching them one thing and practicing something else. Also, if you are asking for financial accountability of your child, duty demands that you set the pace as a parent.
That child is watching you closely. They may not have access to your bank statement. However, it is easy for that young chap to tell if you do not live by what you teach. It’s not all about saving face; it’s about setting a good financial precedent for your kids.
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7. Demystify Savings for Your Teen and How To Set Financial Goals
It may shock you that some adults don’t know how to save, but that should not be the reflection of your teen in the future. So, encourage your teens to save, using financial goals as inspiration.
Interestingly, research by the Royal Economic Society suggests that teens who commit to saving are likely to continue doing so in adulthood.
8. Teach Them How To Draft a Budget
People who budget seldom run into debt and are often better credit managers. So, teaching your kids how to make a budget is essential. Make them understand that a budget is a document that specifies their money inflows and the outlets through which it leaves their coffers.
Next time you, as a parent, are balancing your monthly budget, ask your teen to help and seize the opportunity to show how it’s done.
9. Explain How To Track a Budget
It’s one thing to make a budget and another to stick to it. You may want to help your teen understand that there are weekly and monthly budgets. However, most importantly, help your kid realize that the budget is as good as useless if they don’t repeatedly refer to it as the week or month progresses.
10. Help Them Understand the Concept and Benefits of Giving
From the onset, kids may find giving to be a difficult concept to wrap their heads around. Don’t force it; instead, help your child search for problems they are willing to donate towards solving.
Normalizing talking to your kids about money and walking them through the rudiments of money management for teens is an investment in their future.
ALSO READ: 8 Best Budgeting Apps for Teens
11. Permit Your Teens To Learn by Trial and Error
Of course, we may need to monitor our teens closely. Many of them are tech savvy and exposed to financial products and a teeming number of scammers, both offline and online. However, we need to offer all the necessary support while allowing them to fall off and remount the bicycle of financial literacy.
Parents sometimes wish their kids could know everything about money in a short space of time. Meanwhile, learning financial life lessons is like a marathon, meaning we need to help these budding teens grow into the process of money management.