Raising Financially Confident Teens
Raising teenagers is never easy. There are a bunch of changes happening all at once – most centered around their desire for more independence. While the teenage years can be challenging for parents, especially as fads come and go, one area where you can have a lasting impact is teaching your child how to manage money responsibly.
The desire to become more independent escalates quickly once your teenager begins to earn (and spend) their own money. Whether it’s starting their first part-time job or earning money through babysitting or other tasks, parents can use these opportunities to teach valuable life lessons about money management.
In this article, we’ll break down six ways that parents can help their teens become more money-savvy and boost their money-management confidence.
Learning the Value of a Dollar
One of the most basic and important lessons a teen can learn is the value of a dollar. When your teenager begins to earn money through a part-time job, babysitting, mowing lawns, or other tasks, they start to understand that hard work leads to rewards.
An effective tactic to help your child make wiser spending decisions is to have them break down purchases into hours worked. For example, if they want to buy a new outfit that costs $60 – how many hours will they have to work or babysit to pay for it? How many lawns do they need to mow?
Warning: It’s perfectly fine to help your child with money. However, don’t become accustomed to giving them handouts regularly. If they ask for money, have them do chores to earn it. Otherwise, they begin to expect freebies, and the value of a dollar mindset fades quickly.
Make Budgeting a Personal Habit
Budgeting doesn’t have to be boring spreadsheets filled with numbers. The art of budgeting comes down to knowing how much money you earn, making smart spending decisions, and planning for the future.
Once your teen begins to earn money regularly, sit down and review the concept of budgeting. Begin with having them list all their monthly income, planned expenses, and savings goals. Then, let them work out how to manage their money best. For some, it might be boring spreadsheets; others might find a notebook, budgeting app, or stuffing envelopes as their preferred method.
Remember, the goal is to get them thinking about their money – and how those funds can help them obtain what they want now and down the road.
Save for Something That Matters
Telling your teenager to save a portion of their money will go in one ear and out the other. The life of a teenager is filled with short-lived fads, keeping up with the Joneses, and avoiding FOMO. Breaking through to your child is easier if you help them find their “why.”
Why do they have to put money aside in savings? Why can’t they spend their money as they please – after all, it’s their money! Help them discover something they want. It might be new clothes, going to a concert with their friends, or, for more ambitious kids, saving for their first car.
Once they determine “why” they are saving money, you can help them create a consistent savings plan to reach their goal – and they’ll be more motivated to stick to it.
Set Goals for Motivation
Achieving goals often comes down to three things: patience, discipline, and planning. While it might seem straightforward, to a teenager consumed by the latest trends on social media and among their friends, patience is the hardest trait to build.
Delayed gratification is one of the most challenging characteristics to learn, even for adults who regularly use credit cards to buy what they want now. However, teaching these skills early will have a lasting effect on their ability to bypass future credit card challenges and better manage their money.
Using their savings “why” from earlier, help them break down their goal into mini milestones. For example, if they plan to save $200 in four months, they could aim to put aside $50 monthly – or $12.50 each week. As they make progress toward their goal, their motivation and confidence will grow.
Talk About Credit Before It’s Needed
While loans and credit cards might be a way down the road for your child, it’s important to introduce them to these concepts. Many young people build mindsets that all loans are bad. But that simply isn’t true. Most people need loans to buy cars, a home, and help with unforeseen expenses.
Explain to your teenager what a credit score is, why paying bills and loans on time is important, and how loans work. Show them how credit cards can help cover emergency expenses and assist with cash flow until your next paycheck arrives.
As your child becomes older, consider adding them as an authorized user on your credit card. Allow them to make small purchases that they must then pay back to you with their own cash. Simple credit lessons today can prevent costly mistakes in the future.
Turn Mistakes into Teachable Moments
Everyone makes financial mistakes. Maybe it’s overlooking a bill, being late on a loan payment, or overdrawing your checking account. It’s better for your child to make minor errors now while they’re under your wing and can help.
As your child learns about money, give them more freedom to make their own financial decisions. Doing so opens the door to possible mess-ups. Don’t punish your child for money mistakes – instead, turn these mistakes into real-life teachable moments.
The lessons that last are those we tend to learn the hard way. While you don’t want to let your child make a significant error, minor mistakes have a lasting impact.
We’re Here to Help!
Raising teenagers is never easy. However, teaching them about money doesn’t have to be complicated. Everyday shopping and grocery store trips are perfect opportunities to begin real-life money conversations with your child. Take it slowly, make lessons practical and applicable to them, and they will start to develop the financial know-how they need to succeed in their adult lives.
If you want to learn more about teen accounts at the credit union or have questions about introducing your child to banking, we’re happy to help. Please stop by any of our convenient branch locations or call 801-451-5064 to schedule an appointment.