As children enter their teens, they naturally begin to assert their independence. While this can be a challenging time for parents, it is also a great time to allow teens to practice the skills they will need to be savvy adults.
Knowing how to manage money is critical for financial independence and the better we are with it then the more success we will have with it! Help your teen develop good financial skills by teaching the following concepts.
Money management experience:
The ability to plan for financial obligations has a big impact on our financial security. Give your teen practice by having them assume budgeting responsibility for some of their expenses so that they will be able to plan as adults. For instance, parents might pay for the school meal plan but teens will be responsible for extra treats (eating out and snacks) when going out with friends and dates.
Save, spend and share:
Help your teen decide how much they will routinely save, spend and share and help them set the amounts for each category. Kids who develop the routine of saving continue to build their financial safety net as adults, so start the habit early. Have your teen make a list of their regular expenses to help guide spending decisions and to encourage sharing. Let your teen pick a cause they believe in (church, animal shelter, or another non-profit) and give a portion of their spending money to that cause to develop their sense of community and empathy.
Learning about controlled spending & natural consequences:
Allow your teen to control how they spend the money (within reason) and permit them to live with their decisions. Fight the urge to replace phones, electronics, toys and games which become lost or broken. Resist the urge to "save" your teen from the natural consequences of bad spending choices or carelessness. Mistakes made now with small amounts of cash will save them from expensive financial blunders in the future, and these difficult lessons teach teens much faster than any lecture parents can deliver.
Critical thinking skills:
Encourage your teen to critically evaluate the marketplace so that they become knowledgeable consumers. Knowing how to research a product or service before making a decision can save them from costly schemes and help them avoid financial predators.
Financial patience & budgeting:
Have your teen set a financial goal and plan how they will earn money for a specific purchase (phone, car, etc.). Help them calculate how long it will take to save enough money for their purchase and help them identify opportunities to earn additional funds or spend less to meet their goal early.