“Teaching kids about money is one of the major jobs of a parent,” said author and financial advisor Cheryl Castillo. Unfortunately, most parents don’t impart these money lessons. Whether they lack the confidence to teach it or they assume their kids learn it in school, parents tend to avoid talking to their kids about basic money management.
Don’t delay educating your teens about personal finance. Here are a few tips on raising money-smart teens.
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Give them the money talk early
A Cambridge University study says that a child’s financial habits are formed by age 7. It’s important to teach them the value of money, saving, and good financial habits while they’re young so that they make a habit of making good money choices.
Why it’s important: The younger they’re aware of money, the better their grasp on their finances will be by the time they’re teens.
Determine wants and needs
A need is something necessary to one’s well-being or continued growth. Help your teen learn what wants and needs are. Ask them questions on what they think wants and needs are, and explain the difference.
Why it’s important: A teen that knows to prioritize financially has the ability to put off impulse buys, and is less likely to rack up bad debt.
Identify their money goals
It doesn’t matter what that money goal is. Sit down with your kids and ask them what they’d like to do with their money. Discuss what they want to do with their money and how to reach that goal without any judgments of the goal.
Why it’s important: A discussion like this gives a teenager focus and a sense of fulfillment when they reach that goal. It also teaches them to save for the things that matter to them.
Budgeting an allowance
An allowance lets your teens have a little spending money throughout the week, or month, depending on the set up you choose. You can walk them through a budget for their allowance so they have enough for their daily expenses, savings, and gimik funds.
Why it’s important: This will come in handy for when they start to want things and discourage them from constantly asking for money.
There comes a time when your teen will overspend their allowance and ask you for more cash. Unless it’s an emergency, you need to be able to say no. If you keep on saying yes each time they ask for cash, it ultimately makes them think that money is infinite.
Why it’s important: It will teach them the importance of sticking to a budget and making sure that they have enough for everything.
Teach through mistakes
Look at your own money mistakes, and tell your teen about them, along with the lessons you learned. If they make their own money mistakes, talk instead of scolding your teenager. Show them that a money mistake is something to learn from.
Why it’s important: Everyone makes mistakes with their money, what matters is that they take away lessons from it instead of being yelled at.
Teenagers can be willful and headstrong. Honest communication is the best way to get through to them, and if you tell them all about money, they’ll be more than ready to make good financial decisions.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.