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.