It’s when your children hit their teenage years that they start demanding more money. They are slowly moving away from school, spending more on outings and may even start dating. As you give your children more money to spend around, this is the time they need to pick up on the responsibility of finance.
Managing money is an important responsibility which your children have to pick on early. You have to teach them that it’s not just about spending money, but saving it too. Teaching them now lays the ground work for the future when they actually start earning their own money.
Encourage Them to Save
Teach them early on how to save their money and not to blow it away. Out of their monthly or weekly pocket money, convince them to put money aside for saving. You can do this by giving them a goal to save for. There may be a particular item which your teenager will want to purchase such as a game, model train, book, etc. This is one of the best ways to get them saving.
Later on, you can point out that through saving they can create a financial cushion for themselves in case their friends want to go out for an expensive outing or they want to suddenly purchase a gift. You should also open a savings account to help your teenager.
Creating a Budget
If anyone wishes to successfully manage their money, they have to create a budget. Get your teenagers into the habit of keeping track of their spending. You can do this by installing fun personal finance apps on his phone.
By keeping track of his expenses, your teenager can find which ones are exceeding their limit and cut down on them.
Rather than wait for your teenager to start earning his money, get him familiarized with various financial tasks. This will help him manage his own money when it starts coming in. Get him to write a check, pay the bills, withdraw money and you should even take him to visit the bank.
Give them responsibility to handle their own savings account once you feel their familiar enough.
It’s time that your teenager understands the magic of credit cards – that it is not magic. They must learn how manage credit cards and not get in to unmanageable debt. You can set a limit for the credit card if you’re not sure. The Banks will sometimes give limits which are atrocious. My daughter who is still in school does not work, was given an credit card with an limit of $4000 by an leading bank. I had to call the bank and reduce it. But an credit card is definitely required for building the credit history. On the upside, they have emergency money which they can access.
This is a big responsibility you’re giving them, so watch their bills carefully and talk to them if you feel the bill is too high.
Just like you’re getting your teenager involved in managing a bank account, teach him to invest. Investing is one of the best ways to save up money and double it. At the same time, you have to teach him to read through the fine print and select investments which will turn out positively for him.
At the end of the day, you should stop protecting your teenager from the financial world. Expose it to him, let him learn the ropes of navigating through it, you are only a guide.