Finance Lessons for Your Teenager
If you’ve had to reconsider your financial situation because of the current economic environment, you’re not alone. That said, it might be a great opportunity to teach some financial habits to your teenagers; ones that they can carry into adulthood. Just as our parents and grandparents developed their own attitudes about finances, teenagers can share the lessons we’ve learned through these recent times.
For many teens, money is seen as a means to an end, providing entertainment, clothes, food, etc. If your family is cutting back on spending due to the recent inflation spike, it may be a good chance to turn your teen’s motivators into lessons about personal financial management.
Get Them On Board
Teens are a part of your family’s financial picture, so it’s important to keep them informed on your family’s current situation, if things have changed and why, and their role in the financial plan. Be clear this doesn’t mean a spending freeze on all the things they enjoy; rather, they should aim to be more accountable for their expenses and work to build an appreciation for financial management.
- Help them set their own goals and priorities. Work together to determine their needs and wants, and create a plan to pursue what’s most important. It may be a good time to start a system for financial record keeping, whether that’s through apps, a journal, or a combination.
- Ask them to develop a budget based on their needs and goals. If your teen is looking at a bigger goal like buying a car or financing a trip, saving for their future needs should be a part of their budget. Both the expenditure and revenue sides of their budget should be discussed so everyone is on the same page.
- Get them to want to save. This can take time, but if they understand that their needs and wants will be financed from their savings, they will start to see the value in it. You may want to try further incentivizing them by “matching” their savings or making contributions to their larger goals.
- Show them the potential their savings could have. There are several calculators online that give a rough estimate of how their savings may grow over time. While the results are not exact and are only for illustrative purposes, they could be motivating.
Teenagers are in their formative years, and if given enough opportunities, they will become more responsible with their finances. In fact, instilling some some good habits today can pay big dividends in their future. While they can be motivated by their own wants and needs, if they understand the role they play in your family’s financial picture, they may even exceed your expectations.
At Glownia Financial Group, we can help your children understand the importance of budgeting, saving, and investing. We offer free review meetings for family members of existing clients, regardless of their account size or income.
If you think a family member or friend could benefit from a meeting with us, please have them contact us today!