Everyone needs money, but unfortunately, not everyone knows how to manage it to make it last. You can encourage your teenager to have positive financial habits by first modeling good behavior when it comes to your money and then giving them opportunities to learn how to balance their own books. Keep reading for some great tips to make that happen.
Teaching Teens How to Budget
Creating a budget when you have a mortgage, car payment, student loans, utilities, and other adult obligations isn’t easy. However, when you learn how to do this at an early age, the task is not quite as daunting as it initially seems.
If your teen is already driving, start by helping them understand the total cost of operating the vehicle. Even assuming it’s paid for, gas, which is a variable cost, maintenance, and auto insurance don’t just go away. Specific to insurance, there are many factors that determine how much it costs to put protection on a vehicle each month. Teenagers, however, can expect higher premiums due to their age and lack of driving experience, with teen males often having higher rates because of their increased risk of an accident (. Maintenance costs can change as well, but make sure your children understand that things like tires and oil changes are inexpensive ways to reduce the chances of a premature major repair — and the bill that goes with it.
Still using the car as an example, sit down with your child and calculate their expected monthly costs. Then, make them responsible for paying them. You might set them up with a prepaid debit card with slightly more than what they need. If their total expenses come out to $200 each month, add $225 to their card and let them know that it is up to them to set their priorities. They will be tempted to spend more than their excess on things like stylish new shoes or movies with their friends. If they fail to meet their financial obligations, however, the consequence is losing their driving privileges for the next month. It will not take long for them to learn how to balance their wants and needs and this is an excellent first introduction to budgeting.
If your child finds it difficult to balance their limited budget with their newfound freedom, encourage them to look for ways to increase their wealth. By the time they are old enough to drive, they should be more than capable of handling a part-time job, even if it is only a few hours each week or on the weekends. LocalWise notes that some of the best jobs for teens are dishwasher, ice cream scooper, and lifeguard. Most of these are extremely flexible and will also serve as an excellent introduction to work ethics.
Saving for the Future
When it comes to teaching your children about financial responsibility, immediate needs are not the only thing to consider. Your children must also learn to save for the future. Young children can start with something as simple as a piggy bank, and many financial institutes have programs specifically designed for elementary students. Retirement may not be on their mind at this age, so pick a future date or event where the extra money would come in handy. This might be a family vacation, the county fair, or their best friend’s birthday. Let them know that you will not be providing cash for the “extras,” but do offer to match their savings as an incentive. This will introduce them to the concept of matched 401(k)s and might encourage them to look for this benefit as they enter the workforce after high school or college.
While experience is truly the best teacher, giving your children an opportunity to experience budgeting, earning, and saving is the best thing you can do as a parent to ensure they can handle themselves financially as an adult.
Emily Graham is the creator of MightyMoms.net which offers a wide range of info tailored for busy moms — from how to reduce stress to creative ways to spend time together as a family. She believes being a mom is one of the hardest jobs around and wanted to create a support system for moms from all walks of life