When it comes to teens and finances, knowing the right way to handle money is a key skill to learn. Parents should monitor their teen’s spending habits to help ensure they follow a budget and avoid mismanaging money. To teach your teen about money you need to be sure to give them hands on practice with money-related activities. Here are a few ideas that will help you teach your teen about money management.
Set A Budget
One good way to begin teaching your teen about money is to help them in planning a real budget. Simply find out how they spend their money and show them how to properly budget. You can start by giving them a weekly allowance with a set amount that they would be required to use for specific items. This will force them to create a real budget and decide how to prioritize their weekly purchases as well as plan what to do with any money left over.
Give your teen a weekly chore schedule with their earnings listed so they can associate their allowance with a task or benefit. This shows them money management from a realistic perspective while preparing them for the job world at the same time. By showing your teen how to earn money, they will also learn how to budget with a specific amount and prioritize spending.
Open an Account
For older teens, it is a good idea to teach them account management skills. You may want to consider opening a savings or checking account for them to deposit money they receive as presents, allowance, or other earnings. You can also get your teen a prepaid debit card to help them balance their money with a real account. Prepaid debit cards usually have online access where you can view account activity such as deposits and purchases, which will give your teen the responsibility of realistically managing their money.
Finally, another good idea to teach your teen about money is to show them how to save for big purchases like a car or for things they want to have with a savings plan designed to reach their goal of purchasing the desired item within a certain timeline. For example, that new video game that is a must have and all the rage will mean a lot more if your teen has to save their weekly allowance until they are able to purchase it using their savings. You can even purchase the desired item for your teen and have them make payments like a credit account until it is fully paid. They will then see how loans and credit work. You can even send them reminders about their payment, the balance, or due date to make it more realistic and interesting.
Essentially, teaching your teen good money habits will help them manage their finances well by planning and budgeting all their spending in a manageable way. Keep in mind that you want to give them realistic scenarios that will also help them once they are out of the house and on their own.
Kari Luckett and Jayla Barnsen write about financial topics for CompareWallet.com. Kari is the content strategist for CompareCards.com