• 16 August 2021
crop payroll clerk counting money while sitting at table

Financial Responsibility- Teach Your Teen To Master Finances

In a society where everything is judged, talking about money is taboo. If you have less money, people might look down upon, etiquette you as being poor, lazy, or even stupid. On the contrary, those with lots of resources might be judged as not honest with their earnings or feared to not be exploited. This society needs to learn about finances, that’s why is best to teach your teen financial responsibility.

Either way, most adult people are not comfortable talking about money. As a result, a new job appeared on the market- a financial therapist who can help you to discuss money, and most of the time they start questioning your life from childhood. It is believed that financial behavior starts with the child and that you learn from your parents how financial responsibility. Failure to manage financial responsibilities might lead to stress, depression, and unsocial behavior.

You might say you want to save money for a holiday or a house but never say how much you earn or how much your car costs.

Help your teen enjoy a bright future by teaching them financial responsibility. Knowing the basics of money management will help your child to plan ahead and achieve their life goals.

If you feel a little awkward talking about money, these steps make it easy to explain budgeting, shopping, saving, and using credit wisely. My 12 years old son has his own budget plan, and we reevaluate this monthly.

Follow these simple steps and you will soon have a teenager capable to administer his own money and successfully implement the financial plan to achieve his goals.

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First Step Of Financial Responsibility- Budget Wisely

Budgeting is the first step in order to teach your teen financial responsibilities.

Learn the basics of budgeting.

Explain budgeting in simple terms as a plan for income and expenses over a given period. The first step for a teenager to understand budgeting is to distinguish between needs and wants. Creating a budget and sticking with it can help your teenager reach his/her goal for short- and long-term periods. Thus, the budgeting is an ongoing revaluation.

You can even ask him to do a back to school shopping list as the one here.

Get familiar with ordinary household expenses.

Give your teen an early start on knowing the cost of typical goods and services. My son knows all our bills and he is the one who calculates the total cost of the bills. He helps me with the grocery list and is responsible for estimating the cost of the groceries and finding out the real cost. When we go shopping, he is looking for similar products and tries to find the difference between prices.

Monitor your spending.

I have always used ParentPay to top up my son’s meals for school. And it was extremely easy up to year 6 when the meals had a set price. However, in year 7 I was shocked how much he could spend on the first two weeks: £34.30. I showed him the spending and honestly, he was more shocked than me. Since then, he is checking the price before he orders his meals. Don’t get me wrong: he can eat as much as he needs at school; however, it is better if he actually knows the price so he can calculate and keep evidence of how much he is spending. Ask your teen to keep track of their spending for a month or more. Your kids may be surprised by how much they really spend on eating out or clothing.

Manage your income.

If school remains the top priority, encourage your teen to have some income of their own to manage. For example, I took my son to Greenwich Park, and I gave him £15 money pocket and I told him to buy whatever he wants. The first thing he wanted was an ice cream which on the ice cream vas costs £4.50. He refused to pay this amount of money and decided to go to a small shop to buy a cheaper one. He was immensely proud of himself that he could manage to save money even on ice cream.

And trust me, I was even more proud of him.

You can provide an allowance or support their efforts to find a summer job.

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Second Step Of Financial Responsibility- Shop Carefully

Shop together.

Go shopping together to demonstrate how to get the best value. Compare prices for generic and brand name products at the grocery store. Look for special sales at the local mall.

Research major purchases.

Assign your teen some research when they want to make a major purchase such as a cell phone. Let them compare plans and help decide what features they really need.

Analyse materialism.

Advertising bombards people with messages to consume more. Discuss the importance of moderation and basing your happiness on sources other than your possessions.

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Third Step Of Financial Responsibility-Save More

Establish goals.

Help your teen to set short- and long-term goals that will motivate them to build up some savings. They may want to buy a car or put away money for college. In other words, they have a specific purpose for saving money and this will determine them to be financially responsible from a young age.

Understand interest.

Introduce the power of interest. Your child may want to save more if they realize how much money they can earn by starting a savings account when they’re young. Check with your bank if you can open a junior account for your child. Some banks allow you to open an account for your child when they are 10 years old.

Develop a savings strategy.

Help your teen find a plan that works for them. They may want to set aside a small percentage of their allowance or half the money they get for their birthday. If possible, you can provide an extra incentive by offering to match whatever amount they save.

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Use Credit Wisely

Select the right instrument for you.

There are many kinds of cards to choose from now so you can find the level of parental control that’s comfortable for you. Debit cards give you the peace of mind of enforcing a pre-established spending limit, and many cards give you the option to review all statements.

Pay your balance off monthly.

Let your teen know that interest works against them when borrowing. Show them how paying off a credit card balance each month protects you from paying much more than the original price for the goods and services you charged.

Know the significance of good credit.

Talk with your teens about the importance of good credit. Explain how being responsible about paying off bills helps people to qualify for financing when they need student loans or want to buy a house.

With a little information and guidance, your teen can master the basics of money management. By encouraging them to be responsible, you’ll protect your family’s financial security while you help your child pursue their dreams for college and beyond.

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