Teenagers are at a difficult time in their lives. They are transitioning from child to adult and they are very vulnerable to peer pressure as they are so easy influenced. It is vital that at this stage in their lives they begin to be mature and adult when thinking about their own finances. If teenagers learn at this age about how to manage their money it will set them up for good financial habits in their futures and should help to stop worrying trends of young adults falling into huge debts.
There are ways in which you can help your teenager to understand the value of money and how to manage theirs effectively. These tips can help your teen to develop a mature and responsible approach to money.
* Encourage saving.
Saving is important especially when you are young as you have futures to save for and the potential of huge purchases such as a first house, first car and other expensive items which a large sum of money will be needed to be able to fund. If your teens start saving from a young age they will be setting themselves up well to realise that saving is a very important part of finances. You can help your teen by doing this by setting them up savings accounts. You can talk your teen through the various accounts and explain how they differ- some will offer higher interest if your teen pays in regularly, others will offer the opportunity for your teen to withdraw cash without notice.
Once your teen has set up a savings account it’s important that they stick to the terms and conditions so if they are going to get more interest by paying in once a month then help them to make this possible. Often the sum total of money per month you need to pay in is only $25 and over time your teen will see their balance grow and their interest gained. It will help your teen to see how putting money aside will make it build up for a later time.
* Understand spending.
Teenagers can often become carried away and over spend. They can spiral into debts and addicted to shopping and it’s important to try to understand why your teenager is relying on buying items to give themselves a buzz. Talk to your teen about what they are buying and why, help them to understand that shopping does not cure underlying problems which may be present. Help to gain an understanding about your teens habits and then work with them to find a way to make it less of an issue. You could instigate useful ideas such as walking away from an item which they wish to buy and then only return the next day if they still want to buy it, this often takes out the impulsiveness of shopping and so removes the buzz which is often why people spend in the first place. Ask your teen to think about how purchases will influence them, will the item actually bring them a lot of use, will they get their money’s worth out of it?
* Budgeting.
It is important that teenagers learn to budget. Budgeting can be difficult as sometimes people are not realistic when they are setting out their budget at the beginning but if teenagers begin to learn this skill then when they become adults and have huge financial responsibilities they will become better at this and will benefit from having learnt this skill as a teen. Show your teen what money they have per month and then work with them to break down how this money should be spent. It is important that teenagers stick to their budgets so that they do not end up in difficult situations if they constantly over spend.
* Earning money.
Teenagers will only really learn the true value of money if they earn it for themselves. Having a part-time job will help your teen to understand how valuable money is and will help to encourage them to not spend it as quickly. Once your teen has worked hard for their money they will be less willing to just fritter it away as quickly. It will be a great way to teach them to be money wise and will also teach them other important life skills too.
Teenagers need to learn the value of money as it is an important skill to gain before becoming an adult. Teenage years are very influential and teenagers can learn some very poor habits at this time so it is vital to help encourage your teen to take responsibility for their finances. This will help them to understand their money and to be more likely to save and budget which will help to steer them away from future debts.