By the time kids are ready to leave home they now need to be more equipped with their finances, than their parents were. Yet we are less prepared than the generation before them with today’s teenagers having limited understanding about the financial realities of living, and of how their education or career choices affect their future. The times we live in make it harder to be financially successful, so that means our kids need to be better.
Here are 5 easy steps to get your teen money savvy.
- Put them to work. Work equals independence, helps develop soft skills and general life experience. All kids should have a part time job by the age of 15 (not working for the parents). When you first get started, learning to earn money is more important than spending habits.
- Pay an allowance, and have them manage their own clothes spending, entertainment and other costs you are prepared to pay for. An allowance is not about giving them free money, it is about managing what was assigned in the budget.
- Every family member needs a set of chores that they do not get paid for. Pocket money is distinct from an allowance and should only be paid if excess jobs/chores are completed.
- Talk to your kids about your own challenges with money. If you think you have a poor relationship with money (perhaps because you are a shopper), explain how this has disadvantaged you or forced you to change your behaviour. What would you do differently if you had your time over again?
- Share the family budget. By the time the kids are fifteen your family finances should be revealed. This means that you want to show them what you earn, how you spend, how long before you are mortgage free, and whether you are on track for retirement. This is the most challenging and revealing step for parents. But you can’t expect your kids to take money seriously if you don’t. If you are not on track with your own finances, then get help to sort it. Show your kids that it’s okay to get help, especially if it gets you ahead faster.
Our kids are facing more financial challenges than generations before. Old financial techniques no longer cut the mustard. Money must not be a taboo topic in any family. If you want to create financially independent kids, then you need to show them you mean business, that you trust them with your personal information, and that you owe them your honesty. Money underpins most things. When you are in control of your money you are in control of your life.
Written by Hannah McQueen, founder and director of enableMe – Financial Personal Trainers, Chartered Accountant, and Mum of two. Author of “Pocket Money to Property - creating financially independent kids”.