4 Ways to Teach Your Teen About Money
Managing money is hard for many adults, so it’s no surprise teens struggle to make smart financial decisions. Try these tips, and talk to your teens about money before it becomes a problem.
Time to Talk
With a new high school year on the horizon, many parents across Canada are thinking about post secondary education for their child. How can parents be sure their teenager is well equipped to manage their money when they eventually leave the nest?
While talking to teens about money is not always the most comfortable subject, it can be the most rewarding. After all, they won’t just learn about money, they’ll learn about math, economics, needs vs. wants, the real cost of products, work ethics, the value of a dollar, and so much more.
Here are some useful tips, tools and resources that will help get you started before the ‘Bank of Mom and Dad’ runs dry:
1. Catch a Flick
Forewarned is forearmed: Parents can help their teens to get a head start on good money management practices by introducing them to the series of Funny Money videos that give great advise in a humorous and lively format.
2. Send Them Shopping
Teach them to make smart decisions: Send teens to the grocery store with a shopping list and a fixed sum of money. Their job is to purchase everything on the list with the allotted cash. Decisions will need to be made about quantities, name brand vs. generic products, bulk vs. pre-packaged, etc. Give them an incentive by allowing them to put any left over cash into a savings account.
3. Make a Bucket List
How to spend and save: The biggest challenge for teens is keeping money. A recent survey by Investor Education Fund, showed that almost a third (30%) of high school students aged 14 – 18 expressed their biggest financial concern as paying for tuition and related expenses, yet more than half state the primary reasons to save are clothing (66%) and entertainment (55%). Whether their money comes from an allowance or part time work help them to plan and budget by dividing money into at least three ‘buckets’: pocket money; short term savings for that new video game or item of clothing; and long term saving for college or university. Discuss how it is split and the purpose of each ‘bucket’ so that teens are full participants in how money that they’ve earned is allocated.
4. Earn that Allowance
Help them to earn money: Too often teens are given an allowance without having to really earn it. In real life, it takes work – and a lot of it – to earn money. While it doesn’t have to be hard labour, establish some guidelines for keeping the money coming such as regular chores, maintaining grade levels, abiding by house rules, etc. Permission to take an after school job should carry the same set of guidelines. Be firm, but fair when expectations are not met.
The Investor Education Fund offers unbiased financial information to the general public via GetSmarterAboutMoney.ca. The not-for-profit organization was established by the Ontario Securities Commission (OSC), and is funded through OSC enforcement settlements.