Cultivating healthy money management habits is one of the keys to achieving financial success. The importance of this concept is something that should be encouraged and taught to our children from an early age.Teaching personal finance to teens is something all parents need to devote time to because it will serve their children well, especially when they head off to college or when the time comes for them to start earning their own money. The lessons they learn will serve as their guide to making smart financial decisions as they establish their own financial independence.
Money management, however, isn’t always a fun topic to discuss with our teens, especially those who may think they’re old enough to know everything there is to know already. It can be challenging to instill important money management lessons and parental guidance, but there are ways you can equip your child with essential financial tools they need to develop healthy financial habits while they’re under your wing. Here are some tips you might find handy!
Encourage children to get into the habit of saving
There’s no better time than now for you to encourage your teens to start saving. Help your child develop the habit of saving money as early as possible. As soon as kids start receiving an allowance at home, they should be taught how to set aside part of their money for savings. Talk to your children about even the simplest of financial goals as a means to motivate them to save money.
For example, if there’s an item your child wants to buy, encourage him or her to save up for it instead of just providing the money to make that purchase. If your child doesn’t have anything particular he or she would like to buy at the moment, you can still discuss the importance of having money saved in case of financial emergencies.
Teach children about budgeting
Another important concept to include when teaching personal finance to teens is the value of budgeting. Creating a budget doesn’t just apply to adults. It’s something teens need to understand as they learn how to allocate and spend money more wisely.
Whether it’s by using an app or monitoring funds manually, teach your child how to budget their own money, whether it’s earned through allowance, as gifts, or from a job. Help teens learn how to track their expenses and allocate a budget for their expenses moving forward.
Set a good example
There’s no better way to teach teens proper money habits than by setting a good example. The formation of financial habits in children can start as young as seven years old. Our kids observe and notice our behaviors and actions. They notice every swipe of your credit card each time you go grocery shopping. They see the way you budget your own money and they observe your saving habits. They hear if you and your spouse argue about money.
Set a healthy financial example for them to follow. Try to use cash for purchases when possible. Show kids how you prioritize the needs of the family and don’t splurge on things that are not essential.
Open a bank account for your child
Help your teen grow his or her own savings by opening a bank account for your child. Seeing their money grow with interest can further help motivate kids to save even more. This is a good habit to start developing while they’re young so they can carry it on with them as they grow up to be adults.
Avoid making impulse purchases
Even if you can afford it, it isn’t always advisable to buy your child everything he or she asks for. Just because your teen may find a dress to be “cute” or if he or she wants the latest cell phone, it doesn’t mean making these purchases is the right decision. Instead of giving in right away, teach children the value of delaying gratification. It’s important for kids to understand that they won’t always get what they want when they want it.
Let kids save up and work for what they want
Teens and kids may not understand the value of money because most don’t have to work for it. The best way to teach children this concept is to have them work, earn, and save for a special item they want to acquire or buy. Give them opportunities to earn even small amounts of money. You can assign kids a chore or send them on an errand for which they can earn and save money. Understanding the value of money is more effectively taught when children actually experience how hard it is to earn it.
Teaching concepts of personal finance to teens doesn’t have to be difficult, Use these tips to help instill important financial lessons in your kids. These essential life lessons are ones they’ll come to appreciate throughout their lives!
Help your teen start saving today. Contact Calcite Credit Union for more information.