Teaching children about money is a tricky lesson at any age, but as those chubby, doe-eyed younglings turn into lanky, eye-rolling rebellions, it’s especially trying to get them to understand the value of money. And getting them to understand why mom or dad don’t want to buy them that swanky new gadget every month can be really tricky.
Here are some valuable lifelong-money lessons for your teenager.
1. Being Happy with What They Have
Teenagers of today spend a large chunk of their time scrolling through social media. Since SM is basically a highlights reel of people’s life – the best of moments – it can be easy to get caught up in what others have. It doesn’t matter that what is put out on social media only represents that one perfect moment or that it may not even be real – it’s what the kids see.
To make your child understand this, you need to understand their mindset first. They may whine that their friend got a brand-new car while they are only driving a secondhand one, but it’s up to you to explain that the car they have does the job it is intended to do and that they’re lucky to have one at all.
Treating them like petulant children only leads to them acting like one. They’re old enough to understand or at least begin understanding the financial situation at home or your reasonings for the financial decisions you make – so treat them with respect and like mature human beings.
2. Handling a Bank Account
You should set up a bank account for your child when they’re younger, but if you haven’t, there’s no better time than the present! A simple bank account that they can control will teach them a lot about being responsible when it comes to finances. It also gives them a starter kit for managing their own “adult” bank account once they get older.
3. Saving for College
You may already have a college fund set up for your child, but that doesn’t mean you shouldn’t get them to contribute to it as well. If they’re planning on working a summer job, get them to dedicate a portion of their earnings into their college savings account. Or you can ask them to put a few bucks from their allowance into it.
Either way, this will teach them that they aren’t entitled to anything that they haven’t worked hard for. They will value their education more because they had to earn it in more ways than one!
4. Staying Away from Student Loans
As the next biggest life event that is coming the way of your teenager is college, a lot of the choices they make – including money-related – surround this topic. But before your child ever sends out any applications, you need to have a conversation about how they are going to afford it.
While student loans are seen as the norm, it doesn’t have to be that way – especially since student loans keep getting increasingly higher and harder to pay back. Recent data shows that a student had to borrow more than $30,000 to pay for school – a record high and a 25% increase in just the last 10 years!
So, let your teen know that it’s not a must to shoulder that burden. There are alternatives that can be considered, such as applying for scholarships, community college, in-state universities, or working part-time while in school. The best education they can get is one they can afford.
5. Hazards of Credit Cards
The minute your child turns 18, they are going to be hounded with credit card offers left and right – especially once they’re in college. It can all seem intimidating – and even a bit exciting – which can lead them to make some decisions they regret in the end. It’s up to you to teach them the hazards of debt and stop them from becoming yet another credit card victim.
6. Following a Simple Budget
Regardless of how small their income (or allowance) is, now’s the time to get them used to following a simple budget. The lessons they learn while still living under your roof will carry on as they grow older and budgeting is one of the most important aspects of being financially responsible. Since every teen owns a smartphone, it may be easier for them to do so by downloading an app like EveryDollar.
7. Introduce them to Compound Interest
I know it seems like a tough ask to get your child who will not make his bed no matter how many times you ask to get excited about compound interest, but you can make investing seem fun. The earlier you can get them interested in and used to investing, the better.
Plus, it gives them a chance to understand how they can be smart about making money, which will be a lesson they carry on well into adulthood. They’ll learn that not every dollar they have needs to be spent, that it can be used to make even more money if they use it the right way.
8. How to Make Money
This is perhaps the most important lesson of all. Your child has never had to think about making money because mom and dad have paid for everything their entire life. While that’s as it should be, now that they’re a teenager, it’s time to start making their own money. We’re not asking you to start charging them rent and utilities, but you can encourage them to earn their own money so they can spend on what they like without burdening you financially.
More than anything, it’s a way for them to get used to working – which they’ll have to do full time in just a few short years. Luckily, teens have plenty of free time that they can use to pick up a part-time job. If working after school or freelancing for a few hours from home every week is too much, the least they can do is get a summer job or one during winter break or spring break – you get the idea!
Alternatively, you can encourage them to start a business if they have an interest in entrepreneurship. It’s easier than ever for anyone to start a business these days and make a quick profit, so teach your child to make use of the opportunity!
