Educating your children about finances is among the most challenging tasks of your parenthood. While many kids understand the concept of money and everything that is related, managing finances is still something they need to learn. And as a parent, it is your responsibility to make them aware of it.
Understanding how to manage finance in the early years can be a suitable learning lesson for kids for their future. After all, what we learn in our formative years defines who we are in our later years.
So, while learning finance is not a one-day course one can find on EverythingMom.com, it is something that is of essential importance.
Tips and Ideas to Manage Finances for Teenagers
Here are some tips to help your children immediately take to their heart to become financially healthy adults.
- Establish a Steady Income Source
It is always helpful if a teenager has a job where they can earn a steady income. How much the kid makes does not matter.
It is the lesson that comes with it that is of primary importance. That is, you have to work to get something in return. This way, they would learn to value money.
There are also other benefits to this, such as always having their funds to use as they want and being a little bit financially independent.
- Creating a Needs vs. Wants List
This is not new advice that is only suited for the current younger generation. It is advice that many of the older readers of this post were given by their parents and caretakers. And the reason is that it is that useful.
It is no secret that spending money is easy. Go on Amazon, and you will zero your credit card limit in minutes; it is that simple. One needs to learn how to spend wisely, and one way one can do that is by creating a needs vs. wants list.
Set two columns and think about whatever you are planning to purchase. Sort all the items appropriately in both columns, and you will have the answer for what you should buy and what is something that can be postponed for the future.
- Start Savings
Saving is anathema for younger kids, and it is understandable. Why would one want to save money when they can easily buy the latest Nike Air Jordan?
But saving is a habit that can bore fruitful results for the future.
Now saving does not have to be an aimless activity, where teenager holds 10% of their income without any clear goal.
No, they can easily set goals, such as saving to buy the next MacBook or even for college expenses. The ultimate aim is to make this a habit.
- Have a Budget in Place
No one likes to spend their time creating a budget and going over their expenses, but it is an intelligent thing to do, even when one might find it a bit tedious. And it is true whether one is getting paid weekly or monthly.
Create a budget by listing the income and the designated saving amount at the top. Then one can start adding expenses as soon as they make them.
This will help the teenager better track their finances while also giving them an idea of where they can improve in the next cycle.
- Be Extra Careful with Credit Cards
For teenagers with access to credit cards, this is a piece of advice that can seriously change their world.
A credit card is undoubtedly an excellent way to purchase products and services, but only in the hands of responsible users.
Not only would one have access to money that they do not currently have, but in case of late payment, it could quickly impact their credit score, which will take a long time to recover. There is also the bulk payment one must make at the due date.
- Learn About Investing
Learning to invest from a young age could easily set one up for the future. There is a reason why compounding is called the eighth wonder of the world. Even a fraction of investment regularly can change one’s financial future forever.
It is not going to be easy. Not just because investing is tricky but because teenagers do not want to spend money on something that will benefit them ten or twenty years later. But with a reasonable interest rate, one can quickly secure a gold mine with this.
Managing finances is not something that comes easy to anyone, let alone a teenager. But the good news is that time is on their side.
The only thing a parent would need to do is to instill good financial values in their kid. With just a little bit of patience and discipline, teenagers can set themselves up for life.