When it comes to saving versus spending, teenagers often struggle yet in just a few years they will have to be financially responsible for themselves. As a parent, you need to show your teen how to take care of money and keep their head above water financially, so they are prepared for venturing out into the economy on their own. Here are some tips to help you teach your teens financial responsibility.
Give Them An Allowance
Give your teen a reasonable allowance so you can teach them how to spend it wisely. If you’re not sure how much to give them, the general rule is that you kid’s allowance should be half of their age in dollars each week, so long as this fits in with your family budget. Follow these tips for helping your teen manage his or her allowance:
- Be reasonable: Keep in mind what you expect your kids to pay for with their allowance.
- Don’t use bribes: Don’t let their grades be influential in the amount you give them.
- Let them spend: Let them spend their own money, that’s the only way they’ll begin to understand the value of it. Try to avoid micromanaging their spending.
- Open a savings account and/or checking account: Opening your teen a savings account will encourage them to put money aside every week for a specific goal. As they see their saving grow they will be more inclined to keep an eye on their spending.
Teach your Teen to Shop Smart
Teens love shopping, so you might as well teach them to do it right. There are ways you can allow them to spend while at the same time encouraging them to spend less. The best way to save money at the mall is to sign up for email flyers so they’ll get instant notifications about deals and coupons. They can also find savings on their favorite brands on bargain sites like Coupons.com and eDeals.com. Show them where to look for sales and clearance racks when shopping for clothes. Don’t forget, your teen can also save some dollars by shopping online.
Discuss Economics With Them
Before too long, your teen is going to have to handle their own finances either as a student or an employee. They will need to understand about credit cards and APRs, health insurance, and paying taxes. Don’t keep them in the dark about these issues. A good way to explain them is to show them your family budget. Detail how you allocate fund every month to necessities like mortgage and car payments, credit cards, utilities and food items. This is a good way to set an example for healthy spending.
Encourage Your Teen to Get a Job
Your teen will soon learn about money when he or she starts getting a paycheck. Before the first one arrives, talk to your teen about saving a part of each payment. Decide what the rest of the income should be used for, for example, car insurance, textbooks or travel expenses.
Teach them to Steer Clear of Debt
Impress upon your teen how important it is to avoid debt as much as possible. Explain to them about credit cards and interest rates and show them how it’s better to pay your card off in full each month to avoid them.
Let Them Learn With Tools
Online teaching tools are valuable resources for educating teens and younger children about investing and personal finance management. The Mint has loads of great information and interactive tools. There is also a wide range of high-tech apps for mobile devices that teens and young adults can use to track their income and spend and create good habits. Some of the most popular are Budgt, Spendee and Debt Payoff Planner.
In Case of a Financial Emergency
Unexpected expenses can crop up at any time. Image your older teen suddenly needs a new transmission for her car. How can she pay for it if she doesn’t have the money? In this situation, many U.K. consumers will turn to a payday loan for help but explain to your teen that there is a better alternative, a short term loan. This type of loan gives you longer to pay back the funds – up to six months –which eases your financial burden.
These tips and tools will help you to help your teen mature into a careful spender and a healthy saver who can keep debt at bay.
Luke Lambert writes about family finances. As well as keeping his family on-budget and out of debt, he also makes time to teach his kids the importance of money and how to handle it.
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These are really great tips! Thanks for sharing!
These are some great tips. I truly believe in starting young with our children so they realize money doesn't grow on trees. Thank you so much for sharing
We didn't really get an allowance growing up, but my Dad taught me some of the fundamentals of how to take care of money. It did help when I got older. I really tried to make sure my Daughter had a checking account when she was old enough and a credit card. It really helped her better understand how things worked. I have often to others about why schools don't teach more classes about these things, I guess the budgets are so close that it isn't important. But when our kids go to college, the credit card companies are out there issuing cards right and left. Then not only are they in debt from loans then those bills are piled on top of that too. You are so right, we as Parents need to do more educating our kids so they won't get upside down and will understand the true value of money.
We didn't get an allowance either when we were growing up – my brother and I. Isn't it strange that kids now think that they are *entitled* to get an allowance for doing nothing but being on the planet? I tell my boys every time they ask about an allowance everything that I did as a teenager and then tell them what they do … I agree with you – when you hit 19-20, the credit card companies are waiting in the wings to send you that shiny new card to help you start off with a lifetime of debt. I've been harping on that fact to my boys left and right – if they can't pay the balance off in full on their credit card within 30-60 days – then you save up the money until you can pay for what you want outright. Yes, you might have to wait a little longer for the item – but you'll be protecting your credit rating and staying out of debt at the same time. That's one thing their dad has always told them too – if you can't pay cash for it, then you're best waiting till you can.
My son is in a program that teaches budgeting. It is really a great program! Thanks for the tips.
That's great to hear Sandra! I wish they had something like that when I was in school.
Teaching your child how to handlle & save money is one of the most important things you can do as a parent. Being fiscally solvent will ensure they are able to pay their bills when they grow up, save for the future, etc. Love this article & wish someone had explained it to me when I was young.
I used to watch my parents divide up my dad's paycheck into envelopes for the big expenses so that they would have enough to pay the bill when it came due. That was about the extent of my financial training. I had no idea how important your credit score is, how important saving for the future is – it just seems to be one of those topics that doesn't get talked about a whole bunch. I'm hoping to make a difference there!