How to Teach Teens About Money
Money, as much as some people don’t like to admit, is one of the most important things in our lives. It’s at the center of everything we do. That said; it’s never too early to start teaching your kids about money and how it works. If you have missed out on doing it in the “kid” phase, why not make your child’s teen years count and give them the lowdown on how money works and what it means to be financially aware? Here are some tips to get started.
Teach Them the Value of a Dollar
Of all the money lessons teens should learn, the value of a dollar is essential. Start by giving your teen an allowance each week; the catch is that the money must be earned by completing tasks or assignments given by parents or teachers. Your teen must “work” for each dollar they make, as this is the only way to instill respect for cash. Chat with your son/daughter and help him/her to establish financial goals. If your teen is running low on cash on a particular day, do not just hand it over without thinking. Instead, let them figure it out and try to get back on their feet. This is the only way they’ll value each dollar they make.
Show Them How to Budget
The second step is to help teens understand the importance of budgeting. Most need to know that, if they want to have a good life after high school or college, they need to start thinking about their finances now and they need to get serious about them. Budgeting isn’t about deprivation; it’s about making smart choices so they can have the things they want in life. There are many apps available from the app store so read the reviews and choose an app that offers the functionality you need.
Involve Them in Money-Related Tasks
Are you thinking of taking out a personal loan to come up with the funds needed pay for a vacation or car? Need to know more about the interest payments and terms and conditions? Do you have a mortgage? How is the family doing as a whole when it comes to finances? Are there any problems? It’s important to talk all of these topics out and make sure your teen is present. Go into great detail about how loans work and what the borrower can expect to pay back.
Talk about mortgages and how they work. Touch on the rising cost of interest rates and how they can affect borrowing rates in the future. Don’t forget to talk upfront about any money worries that the family might be dealing with. The key here is to keep everything out in the open and encourage him/her to ask questions at the end of the chat.
Let Them Make Mistakes
Parents, it’s time to stand back and let your teens make mistakes. Yes, they’ll stop budgeting and fumble and fall. They’ll also haunt you with requests for money when they are strapped for cash. They’ll call you and say they’re broke and struggling. But isn’t that all part of the journey? We all have to make mistakes to make progress and learning about money is no different.