Teaching Pre-Teens and Teens Money Management Skills
Teens have more expenses that younger children, so you may, more and more these days, be seeing your child standing in front of your with an expectant hand stuck out for your hard-earned cash. Consider this a prime opportunity to start teaching your child about money.
What You Need to Know
Good lessons for preteens just beginning to learn about money – how to make it, and what to do with it – might include:
- Limiting work hours to decrease interference with schoolwork and family time.
- Agreement regarding what pay will be used for – such as car insurance, clothing expenses, or portions set aside for college.
- Taxes, and how they will take a generous bite out of take-home pay.
- Paying himself first – depositing a portion of each check into a savings account before spending any of it.
- Budgeting a spending plan to find a balance between money coming in and going out, and how to develop a plan for spending less or earning more when there isn't enough income to cover expenses
How You Can Help:
Some ways to help your child learn about budgeting.
- A monthly, rather than weekly, allowance – having your child realize the money must last an entire month will encourage keeping better track of what's been spent.
- Encourage thinking potential purchases through – compare prices or wait until an item goes on sale – rather than buying items immediately.
- Demonstrate how to adjust budgets by separating expenses into needs and wants (which can be cut if necessary).
- Resist the temptation to bail your child out. If he can always count on you to come through with extra cash, he will never truly learn effective money management.
Help your child learn to save for the future, whether shorter long term goals, like a new computer or car, or longer long term goals, like college:
- Have your child make goals more concrete by putting them in writing.
- Encourage goal-setting according to personal values rather than keeping up with the Joneses.
- Motivate your child to save by offering to match her savings toward a long term goal.
- Praise your child's demonstration of responsibility when he reaches a financial goal – your approval means a lot.
- Encourage your child to open a saving account.
Teach credit card wisdom early:
- Explain the penalty structure for late payments, and finance charges to bills not paid in full each month. Show how you use your credit card wisely by going over your credit card bill with your child.
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