Teenagers speak their own language when it comes to personal finance and money management. In fact, many teenagers don’t understand the concept of managing their money. Many of them feel as if this is an adult decision. Teens use their emotion, many times, to spend money. They think about what they want and not necessarily their needs. They don’t see the difference in wanting something and actually needing it. This is even a fact when it comes to mobile devices like cell phones or any other cool technological gadget that they think that they must have.
The Teaching Aspect
If you have taught your teenager about money, all power to you. If you think that it is important (which it is), then it is time to educate your teenaged child about money management and their responsibility when it comes to spending money. It is best to teach kids about money when they are younger, but if you haven’t done so yet, it is never too late. Teach your teenagers how to make responsible financial choices. If the teenaged child is having a temper tantrum about why you won’t buy an expensive item or if they are spending too much money on things like movies, fast food and makeup, it is time for you and your teenaged child to have a serious talk about money management.
Remember that your teenager is a resident in your home and not a guest. As a valuable addition to the family, the teen has to carry their own weight, even if it is not financially. That means, you should assign various chores around the house to your teenager, teaching responsibility. Though, you may think this is not related to money, it is indirectly related because you have to be responsible with spending money, don’t you? If the child does not complete his or her household chores, you withhold their pocket money. Doing so will show the child that to obtain money, you have to work for it responsibly. You could also go a step further and offer an allowance for completing some of those chores. No work – no monetary reward. However, you should discuss the duties first with your child, deciding on specifics and ensuring that there is a mutual understanding.
The Monetary Rules
Agree on a monetary amount to pay your teen for those chores, but never tell your teen how to spend their money. Instead, let the teenager know how much they have to take out for their makeup or to go to the movies. Once you reach the agreement, don’t forfeit by going out and purchasing those same items for your teen. You will be defeating the purpose of teaching them how to manage their money. If your teen overspends and ends up with no money to buy what they need, then have the child understand that there is a wait period until the next household duties are completed. Discuss with your child about your paycheck and the fact that if you were to spend all of it, there would be no money left to pay all the bills and you would have to wait until the next pay check.
Visit the Bank
If your child shows responsibility in managing the small amount of money given for an allowance, it may be time to open up a bank account for your teenager, including a check book and show your teen how to balance the checkbook. Explain the importance of keeping a cautious eye on the bank account as banks do make errors from time to time. Discuss the financial consequences of having an overdraft. You can take this opportunity to also speak about credit history, identity theft, credit scores and credit ratings.