It is never too early to begin developing wise financial practices. In fact, teens have a better chance of developing wise financial practices the younger they are introduced to them. This is a crucial life lesson in general, but it's much more crucial if your kid will soon be heading off to college.
When high school students think about their future, attending college is likely one of the most exciting and immediate milestones. Teenagers will manage their own funds and make decisions about loans, so they will feel free to make crucial life decisions as well.
Finances are no joke and while they may be easy to navigate for some, they may be quite a difficult task for others. That’s why it’s essential to make your teens learn about the value of finances early on. By incorporating these lessons into routine interactions, you may give your teens the best financial start possible. So, if you’re looking to help your teen be more financially responsible but don’t know where to begin, worry not. We’ve made a list of our top 5 ways to help your growing kids learn some financial lessons. Read on to find out more!
1.) Teach Them About Debt and All the Possible Consequences
Regardless of who covers the costs, your teenage kids should be aware of the expenses associated with attending college and the effects of debt. By allowing your kids to make their own financial mistakes, you actually teach them how to be more responsible because this helps them understand that every choice has an impact.
Teenagers need to understand that if they go over budget one month, they will have to make sacrifices in other areas the following month, like eating out for ice cream can affect their ability to buy the game that they’ve been waiting for or hinder them from covering their cellphone bills the next month.
One of the most important lessons that every parent can teach their children is the weight of debt. Even if it’s easier (now) to just hand over some cash to your teens and pay for all of their "expenses," letting them put some money down and learn about debt management can be quite beneficial in the long run and this is one lesson they will thank you for later on.
2.) Give Them An Allowance
The teenage years of any kid is the time when they will want to have an allowance (or a bigger one if they’ve already had one before). So, this is the perfect time to teach them about financial responsibility!
Now, talking about allowances can sometimes be tricky, and one that can be an easy conversation for most and extra difficult for others. Don’t let this discourage you. Just learn to sit your kids down, and set some guidelines and requirements that your teen kids must adhere to in order to earn the allowance.
For example, you can agree to give your teens Php 1,000 a week but, for this amount, they will have to use it to buy their own lunch at school or snacks they want for recess. Or, if they’re already driving, you can opt to up their allowance to Php 3,000 a week, but they will have to gas up the cars themselves. They can keep any additional cash they have after paying for gas to use for other purchases or savings objectives. You might actually be pleasantly surprised by how well giving your teens an allowance and teaching them how to handle it works!
3.) Work On A Budget with Them
It’s a no-brainer that your teens would want to spend their time and have fun, especially when they start getting invited to parties or out-of-town trips with friends. However, this does not always mean that your teenagers will pay closer attention to their spending.
Oftentimes, teens are unaware of how their parents handle finances and are not entirely all-knowing when it comes to the price and cost of some spends and this can make it a little trickier for them to learn about finances. But, that’s why it’s essential to set a good example for them. Setting a good example for your teens through healthy habits and discipline is the best thing you can do for them.
One way to set a good example for them is by teaching them about budgeting. Budgeting is one of the trickiest things to do, and it’s something even some adults struggle with so it must be taught early on as it’s not something that can be learned overnight. An easy way to teach your kids about budgeting is by asking them to help you create monthly budgets and participate in your weekly household goods shopping.
Help them develop a budget plan if they have a part-time job and save money for things like college or whatever car they want. By teaching your teens about saving and budgets, you help them that having fun is still possible while being responsible!
4.) Set Up A Bank Account
A rite of passage for teenagers is opening their first bank account. It’s one of those moments that helps them feel a little bit more grown up and responsible while teaching them how to be financially responsible.
At this point in their lives, you can trust that they already have some money saved up and they’re probably already at the point where they’ve outgrown using their little piggy banks. It's at this time that you know they’re ready for their own bank account.
Given the possibility that they could overdraw their account or have their identity stolen, you generally don't want to connect it to your own. However, you'll want to sign the account so you can monitor their spending habits. Remember: This is an excellent chance to show children how to balance their accounts, monitor their spending, and develop their saving habits.
5.) Place Them In Charge
Putting your kids, especially your teens, in charge can be daunting, but this is one great way to teach them about (financial) responsibility early on. Trust us, you’re not the only one shaking in your boots at this point. Even if this thought does excite them, this is something that will teach them how to be cautious and more responsible later on.
One thing you can do to help your teens learn about financial responsibility is by placing them in charge of the spends. You can do this by giving your teen kids a set amount of money a few times a year and telling them they have the responsibility of making it last until their next "payday" rather than giving them necessities like clothing, gas, and other essentials. They might learn more about budgeting from this straightforward action than they ever will from reading about it.
The goal of educating your teens about financial responsibility is to help them develop sound financial habits for the future. While it may sound difficult and daunting, it’s a lesson that will pay off in the long run and one your teens will be very thankful for. But, just keep in mind that everyone makes mistakes when they first take on financial responsibility for themselves. Your teens are learning and, as parents, we can all agree that failures teach us more than victories do. There is no one "correct" technique to teach your teens, despite what everyone may claim. Despite your background or situation, helping your teens learn the value of financial responsibility assists in laying the foundation for long-term financial success.
