I remember the days when I couldn’t understand why my friends had more pocket money to spend in Paceville (when it was still a thing) than I did. If you’re going through something similar with your teen, condolences and book yourself a nice spa break. You deserve it. But also, here are some ways to help your financial journey easier.
1. Teach them the value of money
Start by helping your teen understand where money comes from and the effort required to earn it. Encourage them to take on part-time jobs or do chores for an allowance. This hands-on experience can help them appreciate the value of money and the importance of budgeting. Discuss how much things cost, from daily expenses like food to larger purchases like electronics, to give them a realistic understanding of spending.
2. Encourage budgeting
Show your teen how to create a simple budget. Help them list their income, whether from allowances, part-time jobs, or gifts, and then categorize their expenses, such as savings, entertainment, and personal items. Teach them to prioritize needs over wants and to set aside a portion of their income for savings. Using budgeting apps designed for teens can also make this process more engaging and manageable.
3. Introduce the Concept of Saving
Encourage your teen to save a portion of their income, no matter how small. Explain the benefits of having an emergency fund and the power of compound interest in growing their savings over time. You can even set up a savings account for them or use a jar method where they visually see their savings grow. Discuss setting financial goals, like saving for a specific item, which can motivate them to save consistently.
4. Teach responsible credit use
Educate your teen on the basics of credit and how it works. If they’re old enough, consider getting them a money account such as Revolut, or adding them as an authorized user on your card to teach them about managing credit responsibly. Discuss the importance of paying off balances in full each month to avoid interest and debt, and explain how their credit score will impact their financial future.
5. Lead by example
Be a financial role model for your teen. Share your financial experiences, including successes and mistakes, and explain the reasoning behind your financial decisions. Show them how you budget, save, and invest. Open discussions about money regularly, and involve them in family financial planning where appropriate, to normalize conversations about financial responsibility.