I always stress on the importance of starting your wealth journey young, however that’s often easier said than done. Teens today are in control of more money than ever, thus it is important for parents to teach their teens how to use their money wisely and to be smart about where their money goes.
I see this as a great opportunity to help our teens learn the importance of proper financial planning long before they are out on their own where a mistake could lead them into money troubles or bankruptcy.
The following tips will help get you started on teaching your teen how to be money smart.
1. Quize : Is you teen money smart
The following set of questions will tell you how money smart your teen. It is also a good place to start if you are unsure about the type of information your teen should know.
• Does your teen currently have money goals?
• Does your teen have some money saving system?
• Does your teen count their change after making a purchase?
• Has your teen read a book on investing or learned about it on a financial website?
• Does your teen make an effort to plan where his/her money is going to be spent?
• Has your teen ever followed through with a budget?
• If you teen needed money for a purchase, would they know how to get it?
2. Help your teen set money goals
A money goal is a wonderful motivator, for not only teens but also adults too, to create a savings for the future or for a specific item. When looking forward to getting something we want, we first come up with a plan on how to get it, then we work towards obtaining that goal. Through this we learn commendable personal values like perseverance, a strong work ethic and decisiveness.
So, how can you do this?
Start your teen off with small money goals. You could motivate them to save up for that cool smart phone or video game machine they so very much want. You could even go as far as promising to give them half the money for the item if they manage to save up the other half. This could help keep your teen’s eyes on the big picture plus nurture a habit of saving in them.
3. Teach your teen the difference between a want and a need
We live in a media based society where our teens are exposed to too many money luxuries that they long to have. All too often parents hear, “I need this!” when they take their teens shopping. In reality the item is more of a want than it is a need thus here comes the need to show your teen the difference between them.
You can begin by talking to them about money and the importance of thriftiness. Explain the difference between a want and a need to them and even offer solutions to what they feel is a need.
4. Allow your teen to work on the family budget
Am sure you don’t want your teen to learn by handling all of the family finances but you could give them a particular item to the budget out and follow through. By allowing them to have an active part in budgeting, they gain some experience and in turn connect how the money was spent to produce the experience.
On a side note, do allow your teen to make mistakes and to try again. This is a learning experience which needs some time to master.
5. Read money books or online money sites with your teens
Books and the internet are excellent resources for all kinds of financial information. Here is a list of financial books and internet sites on money that I recommend parents read and use with their teens when teaching them smart money skills