Kid’s learn a lot in school, but the one thing that is often lacking in their education is proper financial management. This can be detrimental later in life, as the way a person handles money as a teen will likely determine how they handle money as an adult. Since finances are not a part of most school curriculums, it falls upon the parents to teach their children about finances. Luckily, there are some easy methods to teaching teens how to properly handle their money.
- Don’t Procrastinate.
There is never going to be the perfect time to bring up the issue of money with a teenager. Whether it be for something they need for school, or simply the desire for some extra spending cash, kids always find a way to spend money. It is therefore important to begin teaching them as soon as possible. The longer the conversation is put off, the longer those bad spending habits have to take hold for life.
- Make it a Family Activity.
The first thing a parent can do to help a teen learn better spending habits is to make their plans to spend money a family event. This means taking the time to sit together and make a list of what is needed and what is not. Try not to be pushy here. Teens need to make their own decisions, the goal of a parent in this case should be guidance.
The next thing a parent should do is to help their child make a budget. Go down the list that was created before and help them set realistic budgets for each item. Discuss how much money each party will contribute to the budget. It is very important that the teenager understands that their own money must be included. Again, the idea here is to offer guidance. Let the teenager decide what is needed and how much they feel they should spend. Just remember, once a budget is established, stick to it.
- Comparing Prices.
It is also important to teach teens not to shop impulsively. Teach them to find multiple items that suit their needs, and then determine which is best for the cost. Before any money is spent, make sure they understand exactly what it is they are buying, and why they chose that item over another.
- Setting Goals.
This may be the most important step. Teaching a teen to make savings goals will create habits they follow for the rest of their life. Make sure they understand that a portion of all the money they get should go towards savings only.
- Money Management.
Last, be sure to involve teens in real life money management. This means including them in the process of paying bills and writing checks. Try to teach them to understand where money comes from, where it goes, and how it gets there. Learning to do this at a young age will equip them for the future.