One of the daunting feelings that come with parenting teens is the sense that they are reaching a point where they don’t need you anymore. Yet, while they may be acquiring independence on many levels, a worrying number still don’t know how to budget. Teaching them this is one of the last great gifts you can give. It will help them avoid financial disasters, set them up for a more successful life, and help to protect your own finances by ensuring you don’t have to keep bailing them out.
Set an example
As with so many other things, the first way a child begins to learn about budgeting is by watching you. Make sure there are lots of opportunities for this. It can be as simple as taking your kids to the supermarket and putting them in charge of working out which products offer the best value. Look at receipts with them and discuss what was a bargain and what wasn’t. If you’re thinking of buying a larger household item, ask them to search on the Internet for good deals and then discuss what they find. Make sure they’re present when family budgets are being drawn up, and ask them for suggestions. Children are always more interested in learning when they can see that it’s empowering.
Provide an allowance
Kids need to learn how to manage money before their lives depend on it, so provide them with an allowance. Initially this can just be a small amount of money for sweets or comics, with the lesson being that spending it all at once means no treats later in the week. As they get older, shift the allowance to a monthly pattern (so it resembles a paycheck) and make them responsible for more and more of their own things, such as buying clothes, sports gear, music and gas.
An allowance system only works if it has a hard limit. Don’t be tempted to bail your kids out if they mismanage it, no matter how much they beg. After all, it’s better for them to be miserable about missing out on a band they want to see now than it is for them to be unable to pay for food when they get to college.
Discuss college outgoings
One of the reasons young people often get into financial difficulty when first at college is that they’re not aware of all the things a budget needs to cover. Before they leave, go over this with them and draw up a ledger that outlines the most important concerns (reflecting what’s important to them as well as to you). If you didn’t go to college, bear in mind that money will be needed for things like books as well as living costs. Make sure your figures are up to date.
Look to the long term
A kid going to college provides a good opportunity to talk about long-term financial issues and the importance of choosing a major that will lead to a good career. This doesn’t necessarily mean aiming for the most lucrative careers because it’s about balancing something realistic with something your child will enjoy enough to stick at. If your child wants to pursue a direction with no clear career path, discuss the importance of making practical plans and being able to take care of things like health insurance. Make sure it’s understood that you won’t always be around to help.
Emergency options
If the worst comes to the worst and, despite all your efforts, your child runs out of money at college, remember that you can always use a service like Trans-Fast remittance to transfer emergency funds at speed. Sometimes teenagers are hit by expenses no one could have predicted and they shouldn’t have to suffer for that. If they’ve simply been careless, make it clear that the money is a loan.