Every parent knows that teenagers think they know everything; in fact, trying to tell teenagers something is sometimes next to impossible. But as a parent, you want to make sure that your teen is more money-smart; this way they don’t blow their hard-earned money on something frivolous. The best idea for making sure that your teen is money smart is to start teaching them from an early age about the value of money. You should also start teaching them the importance of saving money. By teaching your children from an early age about the importance of money and what it means to be responsible with money, you are laying the groundwork for their later years. It is never too late to start teaching your teen to be more money smart.
Here are some tips on how to make your teen more money smart.
Open up a savings account for each of your children. Go over each bank statement with them to demonstrate how compound interest works. And take them to the bank to show them how the different transactions work. Allow them to make their own deposits and withdrawals, but always under your supervision. Talk to your children about the various transactions and what they do, as well as the various types of bank accounts and slips that you fill out. The more your child understands about the banking process the better off they will be in the future.
Another thing that you can do is to encourage your children to divide their income into different parts, such as spending, and short and long-term savings. By choosing the amounts that they want to set aside for these categories, your children will learn personal finance discipline. Keep the allocated funds separate to ensure that savings are not spent: long-term savings in an investment fund, short-term savings in a bank or fund, and spending in a jar, piggy bank or wallet.
One of the most important things that you can do to help your child be responsible with money is to establish their own “pay day”. Paying your children an allowance on the same day every week enables them to plan how and when they are going to spend their money and to learn from the consequences. But you should remind your children that once allowance money is spent, there won’t be anymore available until the following pay day. A Tuesday purchase could mean no movie on Saturday.
Another good idea is to give your children a budget and allow them to do their own shopping for back to school. By giving them a set limit they are going to have to learn how to find the most value for their dollar and still get the things that they want. You can also make compromises depending on how old the child is, such as “you can buy that designer shirt, but you have to choose regular jeans” or telling them they can only spend so much on a pair of shoes. Setting budgets and limits is key to teaching your child about how much things cost and how to get the best value out of their dollar.
Perhaps the most important thing that you can do to make your teen more money smart is to allow them to make their own mistakes and learn from them. Even if you don’t agree with what your teen wants to purchase, you should go ahead and let them buy it so they can learn that there are some things that aren’t worth buying. Teens tend to learn from their own mistakes, and by allowing them to make mistakes and do things on their own, you are giving them the best teaching tool.