How to help teenagers manage their money
Parents play an important role in shaping their children’s financial behaviour and attitude
towards money. Many teenagers rely on their mum or dad to set the right example when it
comes to managing finances. Of course, it’s not always easy to talk to teenagers about
money, particularly as they approach adulthood. Bearing that in mind, we’ve pinpointed
three areas where you can help prepare your children to navigate the tricky waters of
personal finance.
1. Pocket money and budgeting
It is important that teenagers recognise the value of money and understand that it is not an
unlimited resource. Giving them the freedom to manage their own budget will teach them valuable
lessons about only spending what they can afford, and avoiding the pitfalls of unplanned
expenses. Part of learning to handle their finances comes down to being strict with the money
parents give their children and not helping them if they overspend.
Providing your teenager with a regular, set amount of money and the responsibility of paying for
something they want or need gives them their first opportunity to practice how to stay within a
budget. One way to teach them do so is to assign them a set budget for a specific monthly task,
for example their school lunch. If they take this money and spend it on clothes, or going out, they’ll
soon find themselves having homemade sandwiches.
Research has shown that nearly eight in ten 15-17-year olds who cover unexpected mobile phone
expenses from their own pocket say they keep track of their income and spending. On the
contrary, only half of those who turn to mum and dad to cover extra costs claim to keep an eye
on their financial incomings and outgoings.
2. Developing a savings habit
When it comes to managing finances, many teenagers mimic their parents’ behaviour. So, if
you’re the type of person who saves up to buy something, then it’s more likely that your children
will do the same. If, on the other hand, you’re quick to turn to credit to fund non-essential
purchases, your siblings are likely to follow in your footsteps.
One way of setting the right example is by including your teenagers in some of your financial
decisions, particularly as they reach their late teens. This could include showing them how you
shopped around for a better deal, or sitting down with them to work out the monthly family
accounts.
It’s also a good idea to be open with your children about some of the financial mistakes you made
when you were younger. Sharing your tales can be a good way to highlight the dangers of poor
money management. Learning about the importance of saving and only buying things which you
can afford is an important part of adult life. Without it, youngsters might not be able to achieve
bigger goals, such as: buying a car, going to university, or providing a home for their own family
in the future.
3. Help them manage their first wage
If your son or daughter is trying to save up for a large purchase, or simply wants some extra
spending money, one option is to find a part time job. Getting a job can be a teenager’s first step
towards financial independence and can play a key role in preparing them for the future. While
many teenagers take on informal employment such as babysitting for family friends, anyone over
the minimum school leaving age can work full time.
If your child gets a first job, this will often result in an increase in the amount of cash available to
them. This is great opportunity to discuss about the importance of putting aside a certain sum
each month to stick to their budget. You can also help them understand their payslip and explain
everything they need to know to make sure they’re signed up to the right bank account.
If your sibling is new to the workforce, assist them wisely in putting their first salary to work for
them. In case they have a pre-existing debt, they should eliminate it starting with credit cards,
then moving on to family loans. Tell your children to check in on their goals regularly to start
planning as soon as possible where they want to be in the future and add meaning to their life.
Taken & adapted from:
https://www.moneyadviceservice.org.uk/en/articles/how-to-help-teenagers-manage-their-money
https://www.nbcnews.com/know-your-value/feature/7-ways-make-most-your-first-salary-ncna889011
