Financial literacy is not some innate skill that your young teen naturally possesses. It’s a skill that needs to be nurtured over time.
Parents play a crucial role in guiding their children to become financially savvy individuals. With the right approach, your teen can develop the chops to strategically manage their money, both in their younger years and later in life.
With that said, the question then becomes this: how exactly can parents teach the value of management to their child?
If you’re in that dilemma, then you’re in the right place. This article will delve into six useful techniques that parents can utilise to teach their teens to learn more about responsible money management.
Let’s jump right into it!
1. Teach Them How to Budget
Budgeting is a crucial life skill that young adults should learn as early as possible. This activity entails tracking an individual’s expenses and income (or, in your teen’s case, allowances).
Money is a finite resource, and spending it wisely is something even adults struggle with. If you get your kid to do it early, that can lay an excellent foundation for them to become savvy with money later in life.
The act of budgeting helps your teen track and manage their spending accurately and precisely. This allows them to maintain a good amount of savings, which can be put to good use later on, depending on their overarching financial goals. This guide can be a good resource to teach kids how to manage their money effectively.
To get your teen to start budgeting, you can download smartphone apps like GoHenry or Famzoo to get them to actively budget and manage their funds. These apps also have built-in financial lessons to educate your child on the best techniques for budgeting. They also have family control settings to help parents curate the best experience for the family.
Older teens can use more general budgeting apps or a budget spreadsheet template to track their spending. By getting them to build the habit of budgeting, they’ll be wiser and more disciplined with their money.
2. Give Them a Regular Allowance
An effective way of giving your teen an avenue to handle money is by giving them a fixed amount of pocket money. A regular allowance allows your young teen to use cash in the real world, which can help them understand its importance and utility.
If you want them to be disciplined with how they handle their money, then you should give them a set amount periodically and not stray far from that amount. For instance, you should give them only $100 every weekend—nothing more and nothing less.
By giving them a fixed amount, they’ll gravitate towards making decisions to help them conserve the money for later use. This budgeting skill can help them experience firsthand the rewards of saving money for another time.
As they learn how to budget their allowance effectively, they can learn to spend and save smartly for their needs. This is a skill that they’ll carry with them over the long run.
And as they become more independent, they’ll appreciate how you don’t give them more than they need, as such conditions reflect the real world and prepare them for it.
3. Let Them in On Fun Experiments
Teens learn best when taught in a manner that’s engaging and relatable to them.
As it stands, most financial concepts like debt consolidation and investment management will fly over their head. It simply isn’t the time to talk to your teens about them in a practical sense.
And, frankly, they don’t need to learn those concepts just yet—the basics of finance, like saving, delayed gratification, spending, and budgeting, are enough.
That said, if even simple lessons aren’t entering your teen’s head, then you can consider making the lessons more interactive. One example could be a savings race, where you’ll have your teens race against each other on who can save the most amount of money in a certain timeframe.
By integrating these engaging thought experiments in your lessons, you can teach your teen the values of self-control, patience, and goal-setting in a fun and engaging manner. This carries over to money management, as being good with money entails the aforementioned traits.
4. Encourage Saving with Clear Goal Setting
Teens will be much more receptive and engaged in learning if they can earn a fun reward at the end. And what could be more rewarding than letting them earn something they actually like?
As such, to help encourage them to save and handle money effectively, help them create a goal to work towards. This can be anything, like a toy, an event ticket, or a fund for a road trip.
An effective way to structure goals is by following the SMART goal-setting method. SMART is an acronym that stands for specific, measurable, achievable, relevant, and time-bound, and this framework turns vague wishes into actionable plans.
For example, instead of allowing your teen to frame their goal to get a video game console, guide them to say: “I want to save $500 for a Nintendo Switch 2 in five weeks by making money and saving $100 per week.” This makes the goal clear, realistic, and trackable.
Besides building a clear plan, a SMART goal also helps reinforce your child’s critical thinking and habit-building skills. And when your child sees their efforts turning into real results, they’ll feel a stronger sense of accomplishment, making them more likely to stick with the method and build lasting habits.
5. Get Them to Do Grocery Shopping
Giving your teen a chance to gain practical, real-world experience as young as their early teen years has immense value. One way of doing that is by giving them the reins to do some grocery shopping.
You can start by giving them a list of products to buy and a limited budget. Doing this will test their ability to compare prices, make cost-effective decisions, and weigh the importance of one product over another.
On top of teaching them valuable financial skills, you can also use this opportunity to introduce real-world concepts to them early on. For instance, you can teach them about sales, bulk discounts, and other ways you can reduce the total cost of the grocery run.
Your teen will inevitably grow up to do grocery runs by themselves as adults, so having them start early is a good way to give them a head start and transition into this life more smoothly and confidently.
6. Reward Chores with Income
Money does not fall from trees, and your teen should learn this concept sooner rather than later. While an allowance can be given, if your teen wants to get more money, they’ll need to work for it.
One way you can give them money is by paying them to do chores around the house. For instance, you can give them $10 if they have mowed the garden or $10 for every week that they’ve done the dishes.
By assigning monetary value to their task, you can give them a sense of responsibility while also rewarding them for each completed task. That said, it’s important not to rely on this method too much, as they may associate each chore with a monetary value.
The purpose of giving them chores to accomplish for pay is to instil a sense of work ethic in your child. This helps them understand the importance of money and how they’ll need to work hard to earn a living.
We hope these tips have helped you learn more about ways to teach your teens all about money management.
Also read:
How to Teach Respect to Your Teen
How to Get Your Teen Off Screens
Why Teens Should Have Summer Jobs
Image credit: Freepik, wavebreakmedia_micro
