Do you ever look back at the things you did in your teens and wonder if you could have done them differently? It’s that age when we feel that the world is our oyster, and we often act impulsively. Well, breaking bad habits in adulthood is tough, which is why it is important to teach your teens good management skills that they would need in life. One such skill is money management. While your children are still in their teenage years, it is much easier to mould them into money-wise stewards of tomorrow with financial literacy.
As parents, we never want our kids to make the same mistakes as we did. Let’s not forget that they would have to charter their path, make mistakes and learn. However, what you can do is help them side-step the pitfalls you had experienced. In this blog, we highlight the 5 money lessons that you should teach your teens.
a.Involve them in Monthly Budgeting Exercise
Involve your teenagers to actively listen and participate in the budgeting exercise. This is an excellent way to teach them how to save money and the value of saving. You can start with something as simple as explaining your budgeting process and how much things cost as a percentage of the monthly budget. Don’t overwhelm them with price tags. Instead educate them with the worthwhile options. As they grow older, you can also discuss the trade-offs made and the future returns from delayed gratification. However, make sure you breakdown your budget and discuss areas that are okay to talk about with your teens.
b. The Art of Saving
As your teens prepare for higher education, it’s the right time to introduce the concept of saving for short-term goals versus long-term goals. Teach them the power of compounding through compound interest. Teach them using specific examples of how money can double in a shorter time duration and how with saving they can fulfil their more expensive wishlist. This has the dual benefit of checking on the impulsive buying behaviour and instilling long-term vision and planning attitude in them.
c. Experiential Lessons
Do you give pocket money to your kids? If yes, then this can be the beginning of their relationship to money and influence their behaviour with money. Limited pocket money can empower them and make them responsible for their decisions. You can even open a bank account in their name and expose them to various aspects of banking. Alternatively, you can take them shopping at the grocery store. This way they can see the family’s budget, induce them to compare prices and then make money decisions.The What,
d. Why and How of Debt
As your teens progress for higher studies, debt may be required sooner and sometimes life may tumble because of a medical emergency, unexpected house repair, etc. This is when debt may come in handy. Educate them about the prerequisites for taking debt, responsible credit behaviour and the difference between good and bad debt. Teach them about the common tools lenders use for due diligence and credit decisions so they can build a good credit score from the beginning.
e. Goal Setting
Saving and spending wisely is important but what’s even more important is goal setting. Ask them what kind of lifestyle they want in future, a timeline for their goals and educate them about what they need to do to keep up with those lifestyle choices. This can motivate them to think long-term, begin planning and act accordingly.
As per T. Rowe Price’s 2019 Parents, Kids & Money Survey, 75% of kids wished that their parents had taught them more about money, and 72% reported that their parents are “always worried about money.” Such statistics are not uncommon, so begin money lessons for your teenagers early as they could have a huge impact on their financial trajectory in future.
With all that in mind, there are times that even we as adults need financial help to strike a balance. We, at EarlySalary, can help you with financial wellness ideas, credit, or loans to fulfil instant cash needs, download the EarlySalary app now. To know more, you can reach out to us on: