Apart from the fact that children grow at a rapid pace, children are maturing more rapidly than than ever before.
As a parent you may be at a loss regarding how best to get your teenage son or daughter to value money and to budget money you provide them with or money which comes into their possession through gifts and more.
There a number of actions you may consider to help your teenage child to manage his or her money better. A number are presented below.
Set an allowance for your son or daughter. An allowance encourages budgeting. To learn how to budget, it so follows, that child should be on a budget. If you are in a position to offer your child pocket money, stick to a weekly income you can give to your child. Make it clear to your son or daughter that the pocket money allowance provided is what they will have to ‘live’ on for each week.
Do not give additional cash over and above the pocket money allowance you would have already provided them with as this will encourage a mind-set that spending beyond the allowance entitlement is of no particular issue as they are able to receive from you additional money should they desire it.
Offering your child cash over and above the pocket money allowance sabotages your efforts to teach him or her budget management skills. For your teenage child to learn budgeting basics, he or she requires a realistic understanding of what it means to manage money and what the implications are of running out of money when it is spent indiscriminately.
Do not give pocket money or, if a legitimate situation arises, additional money freely. Receiving money unconditionally does not instill in the child an understanding of the value of money. Thus, in setting the pocket money allowance, establish a work plan on which they are to deliver – be it washing the car, taking care of pets, caring for their younger siblings, etc. Your son or daughter is more likely to learn the value of money, and hence manage it better, if he or she is to work hard to receive the weekly allowance or additional money they may ask for.
As your children become teenagers, and as they grow into teenage hood and become more independent, they start part-taking in new activities – it could be their first girlfriend or going to entertainment zones and establishments. To the extent that you can afford it, be fair in setting the allowance – and hence their budget. Take into account expenses such as school and other commuting expenses, school stationery, zappy personal items, money for going out, etc. Be fair yet not extravagant in dishing out the pocket money allowance. Getting your child to learn how to stretch his or her allowance means that they will have to learn how to manage it – which means that they are more likely to become great at budgeting.
Setting a fair allowance contributes to:
- the valuable understanding of money;
- providing opportunities for choice;
- providing opportunities for decision-making;
- careful thinking of long-term goals and how to accomplish them (for example saving weekly for a laptop);
- a degree of freedom;
- control in their daily experience;
- an inviting climate to talk about money;
Encourage your son or daughter to get a job in summer or after school. Working for their money teaches them the importance of independence which earning your own money instills. In doing so, set boundaries of how they spend money they earn themselves. Your son or daughter needs to learn that the result of spending money indiscriminately – irrespective of whether it is self-earned our the allowance you give them – is not wise and will leave them short up sooner rather than later.
The advantages of a part-time job or a summer job are numerous. They include:
- working for their money to increase their income;
- putting budgeting skills into a more workable, useful perspective;
- able to support themselves – to a certain extent – financially;
- becoming independent;
- experiencing the outside world;
- perceiving the outside world;
- putting into practice their knowledge;
- elaborating their own knowledge;
- giving meaning to experiences;
- understanding how things fitting together;
- becoming aware of mistakes;
- developing self-checking and self-correcting skills.
Educate your children that your giving them a pocket money allowance does not mean that they have a carte blanche to do what they like with it. It is important that you imbue your son or daughter with a sensing of what is a necessary purchase and what is not.
For instance, try and get them to appreciate that there is no real difference between a high end smartphone and a low end smart phone: most probably the latter will provide them with 85% of the functions of the high end phone. Help them to understand that going for the high end phone will not leave them better off as they would be paying a lot of extra money just to have the brand name. Not only will a lower end smart phone allow them to download Apps such as Facebook, Instagram, WhatsApp, email, etc. – but it will leave them with more money to do or buy other things or to save.
Push them to open a savings account, explain what is a savings account or encourage them to ask and teach them the importance of saving. If you know they need to start saving up for something, work with them to make that happen. If you can afford it, incentivise them – match in part or in full every €X they save.
Learning how to manage money takes time. As adults, at times, we find it difficult to remain within budget let alone our teenage son or daughter. They will not become the expert financial planner we wish them to be instantly.