Many parents don’t talk to their kids about money, let alone how to manage money and to be money savvy. If you want your kids to have confidence in their own money management skills then you have to teach them the fundamentals. Below are a 3 tips.
1. Give your teen financial responsibility
When they’re young you can start giving them pocket money, pay them for chores, or even help them to get a part-time job cleaning the neighbours cars, babysitting, working at the local store, selling their own crafts, etc. This is where money management starts.
2. Learn how to save early
Learning about the importance of saving and only buying things which you can afford is a vital money skill. Encourage your teenagers to put aside a small amount every week to buy their sports equipment, or musical instrument. Help them work out exactly how much money they need to put away every week to save up for their purchase. This also teaches them about instant gratification and the money lending trap.
3. Beware the money lending trap
When you buy something on credit, instead of saving up for it, you are robbing yourself of future money. Teach your teen how money lending works, the interest they charge, and why they don’t really want you to pay off your debt. Money lenders make sure that most of what you repay them is interest (and not the debt itself), this way they can prolong the agony for you and increase the profits for themselves.