Does your teen know how ot handle money? If they’re like most of their peers, they’re probably still caught in the loop of “wanting” – constantly desiring the latest items, but not really understanding the value of money beyond the basics.
This is a common problem, and while it may not be a serious issue if your teen’s money skills are somewhat rudimentary, in just a few years time, those skills will be put to the test.
That means it’s time to start teaching your teen about money, but how?
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Look At Their Priorities
One of the most impactful ways to teach your teen about money is by paying attention to the types of purchases they prioritize. This could be anything from buying coffee on their way to school each day to getting the latest smartphone. Based on those preferences, help them run some numbers. How much money do they spend on coffee each week, and what else could they do with that money?
Or, if they want to buy a new phone, or more likely expect you to buy a new phone, look at the cost together and talk about how to save money when buying a smartphone, how they can save to contribute toward the cost, or what lower-priced options they might consider.
It’s key with teens to ensure they have skin in the game when making big, luxury purchases, like buying a new phone just because they want it. If they don’t, it can lead to a sense of entitlement, in addition to a lack of understanding around the value of money.
Help Them Practice
By the time your teen is in high school, it’s time for them to start working on their own financial management, with support and oversight, of course. Consider equipping them with a teen debit card, which links to a central app rather than to their main bank account. In this way, you can maintain some oversight of your teen’s spending but also encourage them to take control by giving them a lump sum meant to last for a set period, starting with a week or two at a time. Practicing this kind of budgeting will help them build towards planning for bigger financial steps as young adults, such as renting an apartment or buying a car.
Talk About Their Goals
For many teenagers, one of the biggest financial commitments they’ll ever make is actually just over the horizon – going to college. However, most don’t understand just how much college costs, even if they’re vaguely aware of issues like student loans and debt. Talk to your teen about the different costs associated with college at the same time that you talk about their goals, dream schools, and potential major, then look at what you’ve saved, what they might still save themselves, and information on scholarships, grants, and other funding.
It’s a lot to take in and should be an ongoing conversation. If they have an older sibling who has already gone through this process, you can also ask them to be involved in the conversation and talk about their own experiences with college and money.
Learning how to handle money is, in many ways, a lifelong responsibility, especially when you account for topics like saving for retirement or making investments, but your teen doesn’t need to master it all right now.
Rather, if they leave for college knowing the basics of saving and budgeting, they’ll be well ahead of many of their peers and prepared to start mastering more complex issues as necessary.
