Educating and creating awareness about money with your teen is like walking a tightrope. During teenage, it needs some hand-holding before he or she is set free from the clutches of parents or guardians to lead their life and finance on their own.
Teaching your teen to stick to a budget is challenging in the sense that they lack control of spending and are easy targets for the marketing world to turn them into spendthrifts. The desperation to buy something can encourage them to go for it no matter how hard and expensive it is even though it is not worth it.
Here are a few tricks and tips to lead your teen to responsible spending and a start to understanding budgeting the right way.
Always Basics First
It’s very important to find out if your teen knows the difference between:
- Actual and expected expenses
- Short-term and long-term expenses
Dig deeper to gauge your teen’s approach to how to save and secure money for a long-term financial plan, or how to control the urge to spend more than their earnings. Good if you can tick any of these, otherwise start there.
Open a bank account for your son or daughter if they don’t have one. Make sure you’re the guardian on the account to keep tabs on your teen’s spending habits, fees, overdrafts, and any other financial issues that may pop up. Your authority on the bank accounts may not go well with your kid owing to the spying on their financial activities but explain in detail about the maturity that is required to handle money.
Familiarize your teen with the bank and financial terminologies so that they master the skills such as balancing a checkbook, using a debit card, and tracking their spending via the bank’s app or online portal. Some kids are gifted with grasping money management very early in age. Consider opening a payment app, then guiding them to responsibly use it.
Engage And Encourage The Participation
Practice makes a man perfect!
Involve your teen in family money decisions whenever a discussion on the budget is happening. Keep things simple, and give some time for them to understand, interpret, and learn.
The underlying idea is to train a teen on the inflow of money, how it’s divided for bills, investments, spending, and other expenses like loans, and education. The practice of getting accustomed to the family budget sessions gives a clear view of what is left for namely two spendings, one is non-discretionary (medical expenses, groceries, toiletries), and the other is discretionary (buying, clothing, hanging out, ordering food, etc.)
The Impact Of Realization
A month of unplanned spending will result in zero money at the end of the month. It is a live example for a teen to think and interpret the habit of spending and will prevent them from overdoing it when they are adults.
Nothing is as effective as realizing when the accountability of each dollar spent is registered in the minds of the teens the importance of budgeting is successfully established.
Let Them Self-Manage Their Money
No matter if it’s the allowance or the earnings from a part-time job; your teen is excited about the inflow of cash and gives them an adrenaline rush. And, why wouldn’t they? Take a moment and think, unlike adults, teens have different expenses such as partying, going out with friends, shopping for gadgets, clothes, etc.
You shouldn’t be stopping your teen from spending instead teach them how to prioritize and categorize money spending. Next time your effort will pay off and you need not worry because your teen will not pamper you for money to hang around with his pals since the cash has already been set aside.
A good rule of thumb is to stick to a planned budget that will always yield fruitful results. Remember, as a parent, it is your convincing advice that will help in following the budgeting tips and not commanding your teen. As discussed earlier, recommending payment apps to your teen since it is interest-free funds can be diverted to savings than spending for usual expenses.