Teaching your teen to manage money...
Your teenager’s first job is an exciting step on the road to financial independence – but only if you teach him to manage his money!
Help your kids cash in…
When a teenager gets his first part-time job it’s just as exciting for Mum and Dad as it is for him. After all, it’s a big step on the road to independence – after years of looking to you to underpin his finances, your ‘baby’ is reaching out to make it on his own! But while the good intentions are there, the results can be quite different. If you’re not careful, your teen’s part-time job can be more of a drain on your purse than you anticipated. That first paycheck can be exciting, but this is when parents need to teach money management and get involved in what happens to those wages each week.
Managing money is one of the most critical skills we can teach our children. Some children may have the good sense to put money away but many get caught up in the material world in which they live. Remember, it is not how much you make but how much you spend that determines your financial wellbeing. It’s difficult for a teenager to comprehend that principle when he’s inundated with daily advertising for all kinds of things he doesn’t really need.
One of the first things that you need to do with your teen if you haven’t already done so is open a bank account. This gives him a place to put his money, and it’s even better if his employer directly deposits his wages in the account. In addition, it’s a good idea for your teenager to have a debit card – they can be a good way to learn money management without risking the debt problems that can accompany a credit card.
When it comes to money, the most difficult thing for most individuals – and your teenager is no different – is the art of saving. You need to insist your child gets into the habit and the best way to achieve this is to set up a separate savings account and arrange a monthly transfer of funds into it from your teen‘s current account. By encouraging your child to do this, you’re setting him up with a fundamental money management strategy that should last a lifetime. If he’s placing a small percentage of his salary away each week or month (suggest he increases it if his wages go up), sooner or later he won’t miss it. His savings will accumulate and eventually he’ll be able to take some pride in the amount he’s saved – not just in the latest pair of trainers or designer jeans.
Remember, when teenagers begin working they have no expenses to worry about. It is easy for them to waste their hard-earned money on items that they’ll use or lose or get tired of within a few short years. By establishing a pattern of saving, your teenager learns to live beyond the moment and is more prepared for the unexpected. And as parents, we know the unexpected usually happens!
Make light work of it…
- Limit hours so they don't interfere with school.
- Discuss a reasonable amount to be automatically transferred into his savings account.
- Visit the bank with your teenager to set up his accounts.
- Encourage ‘smart’ purchases that involve discounts – drum into him that he’ll always get more for his money if he waits for the sales!
- Celebrate saving milestones – for example, when he’s hit £100 in his savings account you could treat him to a movie with his friends.
- Watch and comment on his spending habits.
- Make sure his money is being used for healthy and legal activities!
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