The standard curriculum taught in school will give your children most of the basic knowledge and skills that they need to make their way in the world but far too often, teenagers start earning some money for themselves without really knowing how to handle their finances. This is where you as a parent might have to take up the slack and show them how to be financially savvy and avoid getting themselves into a debt situation they can’t handle.
Here is a look at what financial skills they need to learn, a tip on learning budgeting skills, plus a look at how to show them the way by your own actions and sharing financial tasks with them.
Time to let go
There comes a point where your child has become an adult and needs to be ready to take responsibility for their own actions. It is only natural that you want to nurture and guide your child towards that moment so that they can gain fiscal independence from you at some point and stand on their own two feet.
Some parents might wonder when that so-called fiscal independence moment might arrive! But you do have to at least teach them how to assume financial responsibility and understand how things work when it comes to money so that they hopefully avoid some classic errors that occur when you don’t have good financial management skills.
Start them off with a regular income
Some parents tend to give their kids money as and when they need it whereas others prefer to pay their children a fixed income every week or month. It is interesting to note that kids who get money on an ad-hoc basis are less likely to budget or keep track of their spending than those who receive a regular sum and have to make that money last until the next parental payday.
If you are going to be giving your children pocket money or whatever else you want to call it, if you pay them a regular “wage” rather than just giving them money when they ask for it, you will be giving them a valuable lesson in learning how to budget and keep track of where their money goes.
Lead by example
Your children will look to you for guidance on many things as they are growing up, and they will often develop similar attitudes and habits. If your finances are a bit chaotic and you always seem to be juggling your finances to make ends meet, this makes it more likely that your kids will end following in the same footsteps.
If you show a healthy respect for money and work to a household budget, share these values and skills with your kids. Also be prepared to talk to your children about money and tell them about some financial mistakes that you made when you were younger.
Sharing this information will help them appreciate that you can and do make mistakes with your money at certain times, and it will make them appreciate the importance of good money management.
Share financial tasks
If you are renewing a mobile phone contract or searching insurance for new drivers to arrange cover for their car, go through this process with your teenager rather than just doing it yourself.
It will allow them to see what is involved and should help them appreciate the cost of these things. Teaching your kids about money can improve their prospects for a better financial future.