Teenagers are in desperate need of all the knowledge you can provide for them, and it’s more dire than you realize. What do you think would happen to the world if high schools took the time to teach kids the responsibilities of money management and taught them things like balancing checkbooks in class? The world would be a lot more financially savvy.
It is the number one reason kids end up in college with their first credit cards and end up in debt up to their eyes; they have no idea how to use money, how to manage it and how to save. They seem to think that money grows on trees and that there is always a reason to spend and never a reason to save. If you want your kids to end up like this, then carry on not teaching them anything about their finances.
But if you’d rather your kids grow up with some financial savvy and a good concept of how to responsibly use their money; you should work on teaching them some serious money management lessons. These 10 money management lessons will ensure your kids are good to go as they get older; especially your teens.
Teach them the Terms
The most important way to start teaching your teens important financial management lessons is to teach them the most important terms they need to know. For example, your kids should know that they are going to hear terms throughout their lives that they might not understand, and they need to know them.
You’ll want to start with terms like credit score, APR, interest, balance transfer, debit, credit, over draft and other words associated with finances that they will hear at some point and may not understand.
Help them Save
Here’s something you can help your kids do to show them that saving is good; start an account for them and let them check it out often to see it grow. Have them put a certain amount in there each week and then offer to match a percentage of it so that they can see how their money is growing and how they are earning. When teens can see the effects of saving, they are going to be more willing to want to do it.
Pick Some Goals
What does your teen want in the next year? Does he or she want a car? An apartment at college? Whatever your kids want, go ahead and help them plan for. When your teens have goals, they have something to work for and toward. This is an important money management lesson because kids can’t earn things they want unless they have the money for them, and this will help teach your teens what savings and patience can provide.
Make your kids responsible for their own money. Make them responsible for their own gas or entertainment so that they can understand what it’s like to be responsible for their own finances. It’s not a big deal, but it will teach them how to save and how to budget so that they can afford the things they want to do at any given moment in life.
Provide Allowance or Make them Work
Your teens need a way to earn money so they can learn how to earn it and use it. You can either make them get a job or you can make them earn money at home using their allowance by babysitting or doing things around the house for you. Your teens need to understand that money is earned – not given – and that if you don’t do the job, you don’t earn the money.
Get them a Checking Account
This is a great way to teach your teens the importance of checking accounts. It will help them learn how to balance a book by looking at their account and marking off things that have cleared rather than by calling the number and assuming that what the bank says is available is what’s available.
Kids need to learn that outstanding debits are always possible, that they have to write down their spending and that they have to be very careful about balancing their books. It’s far easier when they have to be responsible for it themselves.
Give Teens Bills
Your teen might not have any bills and you might not want to give them any, but do it. You can be sneaky about it like my parents were making me pay my portion of the car insurance. I paid them monthly and they put that money into a savings account for me.
It helped me learn to budget and pay a bill on time and still figure out who to use my money the rest of the month and it allowed them to save for me for a few years so that I had a nice additional savings account ready when I moved out and began building my own home.
If you don’t talk about money, teens won’t learn about money. Talk about it in every day conversation. It’s a great way to allow them to ask questions, to encourage them to discuss finances and to help them understand things that they should understand.
Let Teens Learn Lessons the Hard Way
If your teen has to be responsible for his or her own money, now is a great time to let them make mistakes since it won’t affect their credit. For example, if your teen wants to go to the movies next weekend with friends but spends all her money on a new outfit this weekend and can’t afford to, she’s going to learn the value of budgeting when she has nothing to spend for the next week and can’t go out the next weekend.
She will learn that she has to stretch her money between now and her next paycheck so that she is always comfortable.
Don’t Bail them Out
It’s not going to be fun or easy, but you can help your teen learn a good financial lesson about planning and saving, but only if you don’t bail her out. If she runs out of money before her next check, that’s too bad. Don’t feel sorry and give her more. Let her learn the lesson the hard way; it’s going to teach her far more than spending too much and then relying on you to bail her out ever will.