Education, Wellness,

5 Important Money Management Tips For Teens

Jan 30, 2022 | Education, Wellness | 0 Comments | 194

Money management in the adult world is still a hush-hush topic. Everyone wants to know how well people are doing, but nobody wants to talk about it in the open. Children are very insightful, and they do notice cues, as suggested by Albert Bandura, one of the leading names in observational learning. There are studies that suggest the extent to which children internalize their parent’s stance on topics, and teens are very easily influenced by their peers and surroundings. As a parent, you should be their first source of knowledge when it comes to money, and investment options for your child, as it can set a strong precedent. So, if you are willing to start this conversation, but unsure about where to start, this article is for you!

Respect Money- The most important starter of this conversation should be to begin by explaining the importance of money to your children. It is a slippery slope when discussing the importance of money as you do not want your child to have a materialistic point of view, but you also do not want to discount the importance of money either. Start by talking about how much effort it takes to keep the house running, to put food on the table, and to get all the opportunities that your family has been blessed with. Explain how money is linked with security, and that money in hand does not automatically mean spending on a lavish lifestyle and flamboyant things to look a certain way. Money should always be respected, but should not be the guiding principle of your teen’s life.

Explain Cryptocurrency- Everyone with an internet connection has heard of crypto, bitcoin, dogecoins, and the list goes on. The problem with these decentralized investment options is that it does not face any regulatory limitations from the government making it extremely easy to defraud people who do not know better. Celebrities are often promoting crypto-currencies to hike up their value, till it reaches a zenith, and then when the value keeps going down- nobody wants it anymore. This is a classic case of the pump-and-dump scheme that is going on in the digital space. Teens get roped into this idea as it trendy and their favorite influencers are promoting them, but they end up losing a significant amount of money being lost. It is a particularly important marker of money-management discussions to talk about crypto-currencies because of their relevance in the current age.

Establish Needs vs Wants- If you are someone who gives monthly or weekly pocket money to their teens, a great money-management tip would be to differentiate between their needs and wants. Explain to them that daily school items, personal care items are NEEDS while the bag that they wish listed on an e-commerce site is a WANT. Make it clear that the allotted pocket money has been decided to keep in mind a teen’s basic needs and the extra money needed for parties and hangouts with their friends.

Budget for Bags- Now talking about that Bag they wish listed on H&M, there is no reason why they cannot get that if they are smart and prudent about their money. This habit can later be used as a way to get them to save up for their short-term financial goals. If they have a trip in mind they want to take at the end of the year, encourage them to keep some money aside each month so when it is vacation time, they have all the money saved up. This logic can be used for any extravagant buy or activity they want to talk about. This also introduces the concept of a Fixed Deposit or a Recurring Deposit to their lives. (you can also throw in some interest from your side, just saying!)

Create An Analytical Chart- Book-keeping and tracking one’s finances is a great way to kickstart healthy financial habits in your teens. Evert month or 3 months, ask them to create a chart of their finances note the places where they spend their money more, and ask them what they can do to optimize their budget. If they comprehensively layout their finances during this discussion, do acknowledge and reward this effort as this habit needs to be encouraged as much as you can. Make this fun by asking them their creativity lose when they make this analysis, it can be a talk, it can be a Powerpoint, it can be a handmade chart-whatever the method make sure they enjoy while learning how to manage their money.