Parents of teenagers know that trying to logic with their children regarding money almost seems like a lost battle. But instilling a sense of financial discipline and accountability doesn’t always have to be about preaching. There are many situations that can help teenagers and young adults living with their families grasp financial planning.
It is always better to start involving your children in financial planning as early as possible. But even if you have not in the past, it is never too late to give them some responsibilities that help them understand basic concepts such as budgeting, compromising, monitoring expenses and watching out for financial fraud.
In addition, people in general are more likely to be responsible when they have to live with the consequences of their actions. So instead of warning about potential outcomes, let your older teens make some decisions that might not be optimal, and see the results for themselves.
Here are a few ways to kick start your teen’s development into the financial planning world.
Provide a debit card
Your teen or young adult probably receives an allowance or additional cash from you for transportation, school supplies, etc. Instead of cash, consider providing a debit card associated with his or her own account, which will offer an opportunity to track expenses as well as to learn the basics of managing an account, online banking and reading bank statements.
You will only need to make sure that your bank can provide a student account and a card that don’t have annual fees, ATM fees, etc. And if there are any such fees, especially related to overdraft, you will need to discuss with your teen how to avoid these charges.
Share financial decisions
Older teens and young adults should be part of decisions related to their lives, education and even some family financial decisions. Shielding your children from making decisions doesn’t help them when they eventually get out of the nest and begin their own financial journey. If you decide to skip vacation to pay for a major purchase or another big expense, let them be part of the decision.
Children in general learn by example. The more situations they get exposed to through their lives, the more likely they’d be unfazed and able to manage financial issues in the future. Of course, there is a limit to how much you may share with a teenager before you trigger feelings of insecurity or anxiety. Each family should be aware of these limits, but should also avoid being overprotective in a way that gets in the way of learning.
Similarly, if you have some routine tasks that you do as part of your budgeting — like reconciling your receipts, reviewing your bank statements or filing your bills — think of tasks that are age-appropriate and can be assigned and done by your child. Again, seeing the process can be part of learning.
Think of savings
Parents, regardless to their financial abilities, may want to provide for their children and meet each and every wish of theirs. But when your child is earning money from allowance, small jobs, or any other source, it is a good idea to encourage him or her to save — especially if a big purchase is on mind.
It is even better if you encourage your children to earn some money to pay for some of their demands. Need a new iPad? How about offering to help the neighbours with babysitting or house sitting? Looking to go on a vacation with friends? The parents could pay part of the costs and leave pocket expenses to be earned.
Stepping back slightly from meeting every whim and wish could help your teen mature sooner in terms of learning how money is earned and spent. And this sense doesn’t only moderate unrealistic demand but it also helps develop accountability in the long run.
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