Sometimes, it’s hard as parents to watch your teens squander their allowance or money they’ve earned from a job. You want them to do better, but how do you teach them? Or maybe you are just beginning with the basics of money management, and you want to make sure they get off to a good start.
Money management for teens comes with practice and consistency. Wherever you are in the financial planning process, it’s smart to have some ideas on how to work with teens to build healthy financial habits.
Implement an Allowance
You may already be doing this, but need some help on how to help your teen save and control his or her money. If so, read on for more tips. If you’re not giving your teen an allowance, go ahead and start. There’s no better way to learn how to handle money than handling money!
Family Meetings
As you begin the allowance – or if you’ve already started one and need to get a handle on things – sit down with your teen and make your expectations clear. One possibility is to require the first 10% of the allowance or income to be donated to charitable cause(s) of their choice, 40% saved, and 50% for spending (always with an option to save).
Of course, this will depend on the amount and frequency of the allowance, and also on your personal family dynamic. The point is to give your teen money on a regular basis, while requiring specific discipline about handling it. This sets the stage for responsible budgeting later in life. In fact, you might want to create a budget along with your teen to help manage his or her allowance “income” (or actual job income).
Let Consequences Happen
As parents, we often want our kids to be happy and to have opportunities for a better life, and out of sympathy we might be tempted to bail them out if they’ve been irresponsible and spent their money too fast. But consequences are powerful learning tools, and it’s better that they learn about the consequences of mishandling money while living under your roof than when they’re out on their own with more at stake. So within reason, let your kids take the consequences for their spending habits – once the money’s gone, it’s gone until next allowance or payday.
Teen Business Web Sites
There are sites springing up all over the internet for teens who want to earn money. These sites often have financial advice as well, and message boards and forums. Your teen can sign up with one of these and learn a lot about entrepreneurship, what jobs are currently available, and how to manage his or her money. Such sites can be invaluable resources for teens who want to start earning.
Let Your Teen Pay for Certain Things Him/Herself
As you create your teen’s budget and lay down your expectations for his or her spending, it’s a good idea to make it clear what you will pay for and what your teen will pay for. For instance, you might make up a list with two columns – things your responsible for and things your teen is responsible for funding. Parents may pay for necessary clothes, school supplies, and food, while teens may be responsible for paying for discretionary items and activities.
Do not give up if there is initial resistance. This is a long term learning situation and needs to be developed and expanded to meet your teen’s situation over time. Consistency is key!