9 Ways to Teach Your Teenagers About Money
Money Smart Week of Wausau happened this week of April 20th – April 27th and we thought this would be a great article for the message we, as a wealth management firm and as part of the Get Smart Wausau Coalition and financial literacy education programs, are entitled to teach.
In the following article we will give short tips on talking to teenagers regarding finances and educating them on the importance money will have in their future. With help from the article written by Michele Lerner, writer for The Daily Finance, we believe you and your teen can learn more about these aids.
Money management skills, budgeting skills, and smart money choices are as essential to children as brushing their teeth and eating healthy. The latter are both taught at an early age, where money management usually is not. Although some school systems have added financial literacy to their programs, many have not. Because of this the parents are responsible to ensure their children are ready for adult financial life. The next nine tips are great suggestions from experts and experienced parents and have been proven to work.
1. Start with a game. There are websites such as, PracticalMoneySkills.com and Learn4Good.com that have free games to teach your children about money management. Such games include; learning to run a business, road trip and saving methods, retirement expectations, and many more. Hands on, technology influenced games seem to be popular and are not “bad” for you as once was thought.
2. Put them on a monthly budget. Your kids should already be on an allowance at this point, but you should consider once they get to the teen age to continue teaching about money management and consider a “monthly infusion”, rather than an allowance. This will teach them their spending limit for a specific amount of time and not just for whenever they need or ask for it.
3. Pay them for choosing to save. Your kids have probably been receiving gift money for birthdays or other holidays. Use this as the perfect time to teach them to save at least 10 percent of that money. The money they earn, whether it is from chores or helping the neighbor, can also be put into a savings account. One offer to your teenagers is to match the savings as an incentive for them to save more. Help them research banks to find the account with the lowest fees and highest interest rates, which could be a learning opportunity for both of you. Some teenagers may already have jobs and this will give them the challenge to research checking accounts and debit cards, but with this comes more education regarding fees, overdraft protection programs, and direct deposit.
4. Give them a clothing budget. Have your child come up with a list of clothing needed for the school year or summer months. The most important is to make sure these are “needs” and not “wants”. Figure out a practical budget and then put the money on a prepaid debit card and give to your teenager. This gives them the power to buy their own clothing, but once it’s gone it’s gone and they must learn to budget and watch for specials.
5. Teach them the art of thrift. Teach your kids to appreciate thrift stores and flea markets. These can be great resources for gifts, books, DVD’s, etc. They need to learn frugal shopping when they are on their own and using their own money.
6. Give them a budgeting project. New cell phone plans, vacations, buying a new car; these are all great examples of budgeting and weighing money solutions. Ask your child to research the options of financing and various ways to budget for these extra life experiences.
7. Encourage them to get a job. Nothing teaches teens money skills like getting their own paycheck. Before their first paycheck arrives, make a plan with your child for saving part of their check. Decide how much control over the money your teen will have, and whether they should begin paying some bills with it, such as car insurance, saving up for a car, etc.
8. Talk about college financing. Student loan debt, on average, has risen in the past few years. As of 2012 the school loan debt average amount was $27,253, according to FICO. High school students need to know their options for college and their expectations for financial contributions during their college years.
9. Warn them about identity theft. A study in 2012 completed by AllClear ID showed that minors are 35 times more likely than adults to have their identity stolen. Warn your teens about the importance of safeguarding important information about themselves such as; social security numbers, name, and bank account information.
You are the parent now, so “sit down with your kids one by one and show them how to make a budget.” Dave Ramsey lectures that you “cannot make the budget for your kids”. Let them give mature input and let them know this is “their” budget, and you can help teach it and correct it. They need to figure out their own priorities and long –term goals. Teaching your teen how to properly handle their money will continue that feeling of responsibility into other aspects of their life. Money management is extremely important, and helping your teenager understand this may help your own money management also.