By the time kids are ready to leave home, they’ll need to be more equipped with their finances than their parents were. Yet they are less prepared than the generation before them, with today’s teenagers having limited understanding about the financial realities of living, and of how their education or career choices affect their future. The times we live in make it harder to be financially successful, so that means our kids need to be better at managing their money. They need to know about budgeting, finding a website to compare life insurance policies on, how to pay taxes, where to find the best deals, and lots more.
But this is easier said than done so here are 5 easy steps to get your teen money savvy.
- Put them to work. Work equals independence, and helps develop soft skills and general life experience. All kids should have a part-time job by the age of 15 (not working for their parents). When you first get started, learning to earn money is more important than spending habits.
- Pay an allowance, and have them manage their own clothes spending, entertainment, and other costs you are prepared to pay for. An allowance is not about giving them free money, it is about managing what was assigned in the budget.
- Every family member needs a set of chores that they do not get paid for. Pocket money is distinct from an allowance and should only be paid if excess jobs/chores are completed.
- Talk to your kids about your own challenges with money. If you think you have a poor relationship with money (perhaps because you are a shopper), explain how this has disadvantage you or forced you to change your behaviour. What would you do differently if you had your time over again?
- Share the family budget. By the time the kids are 15, your family finances should be revealed. This means that you want to show them what you earn, and how you spend, how long before you are mortgage-free, and whether you are on track for retirement. This is the most challenging and revealing step for parents. But you can’t expect your kids to take money seriously if you don’t. If you are not on track with your own finances, then get help to sort it. Show your kids that it’s okay to get help, especially if it gets you ahead faster.
Our kids are facing more financial challenges than generations before. Old financial techniques no longer cut the mustard. Teens are able to access gambling online for example. If you think your teen is doing this and you are looking to learn more about the betting aspects, click here to view one of the many websites that can help with advice. You see, in the day and age that we currently live in, there are a lot more ways to establish a good financial situation. And some of them may be ideas that you’ve never considered before either. For example, the idea of investing money into areas like Bitcoin, a type of cryptocurrency, may have been unheard of years ago, but now it’s a very popular way to build your finances. All you have to do is read something like this Bitcoin Profit review (Bitcoin Profit Erfahrungsbericht) to see how beneficial it can be for yourself. This should get spoken about when your children are of an age to start investing any money they have into different areas of financial life. Money must not be a taboo topic in any family. If you want to create financially independent kids, then you need to show them you mean business, that you trust them with your personal information and that you owe them your honesty. Money underpins most things. When you are in control of your money, you are in control of your life.
Hannah McQueen is the founder and director of enableMe (enableme.co.nz) Financial Personal Trainers, a chartered accountant, and a mum of two. She’s the author of Pocket Money to Property: Creating Financially Independent Kids, published by Allen and Unwin, RRP$29.99.