Teaching Teens about money
My daughter was packing her laptop for school the other day in her bag alongside a rather leaky water bottle.
When I pointed this out, and the potential damage to her computer, she seemed to think that if her current system was damaged, we’d just get her another one (partly because it is a must-have for her courses, but still). When I set her straight on that tidbit, it made me think. She’s certainly not alone. In fact, that is a common point of view in her age group.
And I’m sad to say that, in this hi-tech, instant information era, where toys, bells and whistles (and their costs) keep pushing ahead (how many kids do you know under 12 with an i-something?), some of the value of money lessons get lost.
Have a teen or pre-teen in the house? Teach them some important lessons about money and the value of it during these important pre-adult years, right before they embark on their own. Soon the money decisions they make will have direct impact on their own lives.
Budget setting-Teen style
Sit down with your child, and help them set up a budget. Beyond basic necessities (i.e. food, shelter, necessary clothing), what do they spend money on? Outings with friends? Video games? Name brand clothing? Extra sports sessions?
Determine what sort of expenses you are looking at, and actually let your teen manage these expenses on their own. Set up a budget, and physically allocate cash for these anticipated expenses.
What will hopefully happen is that your child will find themselves in a situation where they have to make a decision (i.e. spend on this or not on this).
Money is Finite
When it is gone, it is gone. As the months go by, the lesson here is to hopefully attach strategies to be creative in managing money, and to get accustomed to the concept of sacrifice in the sake of responsible financial management.
Get to Work
Have your child get a job- just like you. Have them set up a goal (i.e. an item they’ve been eyeing for a while).
Set to saving up for the item with a timeline attached. There are a few lessons to be derived from this. The first, of course, is the relationship between time spent and money earned (how much is that? 25 hours of your time at work!). Secondly, kids will realize the long-term nature of savings-which is a hard lesson to teach in this era of instant access to everything.
Thirdly, kids will be able to learn what it feels like to experience the success of setting a financial goal and sticking to it, which may help them minimize credit use down the road.