As a parent, you probably want your son or daughter to learn how to be responsible adults. Most parents focus on teaching how to do chores, do well in school, social skills, etc., but often overlook an important skill – managing money.
They should learn about it from an early age so that they become financially savvy adults and not buried in debt. And the earlier they learn about good money habits, the better. Here are some tips on how to teach teenagers about money:
Talk About Budgeting
A budget will serve as a guide to make your teen understand how much they should spend, what they should spend their money on, and most importantly, how much money they should save for their future goals.
An excellent first step is encouraging them to start writing down all their earnings and expenses. It’s also important to teach them to save, and you can begin to advise them to save at least 10% of what they make for the things they want to buy in the future.
Consider Giving Them an Allowance
Have you ever giving your teen an allowance? It might be a good idea to do that if they complete their house chores. These could be making the bed every day, washing the dishes, cleaning the bathroom, etc. This will make them understand the value of money and that they have to work to get it.
Inform About Delayed Gratification
Practicing delayed gratification is hard enough for most adults, but it’s much more difficult for teens to understand it. If, for instance, they want the newest smartphone, it’s a good idea to make them wait to get it and even contribute with a part of the price.
Incentive Them to Make More Money
Teens have a lot of spare time, so they could make an effort to make pocket money. There are many ways they could do that, such as babysitting, mowing the lawn for the neighbors, cleaning cars, or maybe even a part-time job they can do after school. Teenagers can also apply for part-time jobs if they don’t clash with their education. It will likely teach them responsibility and how to earn money.
Open a Bank Account For Them
As adults, we can’t stash cash under the mattress, and we need bank accounts. Your son or daughter will likely need them too. It’s a good idea to open a bank account or even a credit card for them under your supervision so that you can teach them how to deal with credit and banks.
Talk About Good and Bad Debt
We’re often taught that having any kind of debt is bad, but that’s not always the case. Not all debts are created equal. Good debt is when it can make you more money or help with your career. For instance, student debt on a low-interest rate is not bad because it will likely help them find a higher-paying job and advance in their careers. Another example is a loan that will help you build a business. On the other hand, car loans, or anything else that loses value quickly can be considered bad debt.