3 February 2020
How to help teenagers manage their money
It’s true that the earlier healthy financial habits start, the better. When it comes to financial behaviour and attitudes towards money, parents and carers play an important role.
However, it can sometimes be difficult to talk to teenagers about money, especially as they approach adulthood.
Budgeting is key
When it comes to saving, knowing how to budget is an extremely useful tool.
Pocket money is one of the first instances of financial freedom and responsibility many young people encounter. Providing a teenager with a regular, set amount of money gives them their first opportunity to budget.
It’s interesting to see whether they will spend all their money in one go or budget for the week or month ahead.
Keeping a record of what you have spent is a good way to keep a track of your daily, monthly and yearly finances, and this is something that can be passed on and adopted early in life.
Writing down a budget will (hopefully) give teenagers a clearer understanding of their financial incomings and outgoings and where they can save.
Lead by example
Many youngsters will follow in the financial footsteps of their parents, so setting the right example is key.
Do you save up to buy something or are you quick to turn to credit? These decisions are likely to influence the financial choices your teenager makes later in life.
You can send positive and responsible messages when you:
- Set savings goals
- Set aside money for emergencies
- Avoid impulse buying
- Set up realistic budgets
Make saving habits second nature
Learning about the importance of saving is a vital first step in giving your teenager the financial knowledge they need.
Buying things when you can afford them is an important part of adult life and encouraging teens to put aside a small amount (whether that’s weekly or monthly) is a crucial skill.
Help them by setting realistic, easy to reach goals for their money. A short-term goal (3 – 6 months) might be to save for a new phone. A medium-term goal (1 – 3+ years) may be to save towards the down payment for your first car. A longer-term goal might be to save towards post-secondary education costs.
It can be difficult to talk to teenagers about finance but starting early will give them the tools they need now and in their adult life.