Unfortunately, money management isn’t a class your child is likely to take in school. Their teachers will help them learn what they need to know to get into college, but it’s up to you to teach them how to live on a fixed income once they get there.
Unfortunately, many parents only tell their teen how money works instead of letting them experience it for themselves. Here are five tips that are less abstract and more concrete that will help you teach your teen the value of a dollar. That way you can feel better about their money management skills when it’s time for them to fly from the nest.
Show Them Quick and Easy Ways to Save
Saving money is about a lot more than not buying that shirt you really want or looking through the coupons in the paper. It seems everyone is trying to nickel and dime you nowadays, so it’s a good idea to show your teen the tricky ways people try and get more of your money.
For example, when you send money with a money transfer service, you end up paying more than just the cash you’re sending. There are fees and exchange rates involved. It pays to compare a few different transfer services to find one with low fees.
Teach them to look at shipping costs, in app purchases, credit card interest rates, and banking fees.
Help Them Understand the Cost of Living
When someone else has been paying to keep a roof over your head for over a decade, it is easy to take for granted exactly what goes into keeping that roof right where it is. That’s why it is helpful to teach your children exactly how much it costs to live.
That means breaking down your budget and sharing how much everything costs including:
- The mortgage or rent
- Utility bills, like electric and internet
- Car payments
Not only will it be eye-opening to see how much each individual item in your budget costs, it will be even more eye-opening to see how much it all amounts to at the end of the month.
Make Them Earn Their Money
It’s easy to spend someone else’s money. It’s a lot harder to spend your own money. In order to learn this lesson, your teen has to make their own money.
Getting a part-time job is a great way to teach them this lesson. It will teach them exactly how much work goes into making a dollar, as well as how important it is to show up on time.
If you’re worried about a job interfering with their studies, consider giving them a list of chores to complete around the house. They can also get a part-time job during the summer and drop it when school starts.
Help Them Save for Something They Really Want
As an adult, you don’t always get what you want exactly when you want it. The beginning of this lesson starts with making your teen pay for wants with their own money. However, it won’t take long before they realize they won’t be able to buy that new iPhone sacking at the local grocery store.
Don’t let them get discouraged! Instead, help them figure out how to save for the thing they really want. Help them come up with a plan to save a certain amount of money over a period of time and match what they save so they can see how rewarding saving can be.
Help Them Manage Their Own Account
Spending cash and using a credit or debit card are totally different. People will spend more using plastic than they will paper, which leaves many teens up the river when they get their hands on their first credit card.
Instead of letting your child figure it out on their own when they get to college, open a bank account for your teen while they’re still in high school. That way they get practice checking their balance and using a debit card to make purchases.
Just make sure you keep an eye on their account too. As a cosigner, you’ll be just as responsible for overdraft fees!
Money management isn’t something your teen should have to figure out on their own. That’s just setting them up for failure! Instead, follow the tips on this list, help them learn the value of a dollar, and they will have a skill they can use for the rest of their life.