One of the best ways to prepare teens for the future is to teach them how to manage money. Discussing money with teens helps create a sense of financial awareness that can benefit them for the rest of their lives. While talking to teens about financial management isn't always easy, the statistics on teen financial literacy makes that discussion very necessary. Here are some tips for talking to teens about money.
Show Teens How to Earn Money
The earlier your teenagers can start making and spending money, the faster they can learn how the financial world works. Help your kids come up with ways to make money, which consequently helps them start saving toward their future dreams. Teens can earn money in many ways, such as babysitting, dog-walking, and so on. It doesn't matter how much they make; the point is to start a money-making habit and learn through it to make significant financial decisions in life.
Teach Them How to Create a Budget
When talking to teens about money, creating a good budget is the starting point for a great financial plan. When teaching teens how to create a budget, the goal should be to help them spend less than they earn. For the working teens, talk with them about managing their spending and savings. A reasonable budget allows them to buy the things they need while still saving funds for bigger future goals.
Teach Them How to Control Spending and Save
Overspending is one of the biggest problems many teens struggle with even when they already have a budget to follow, which makes saving even more difficult. If your teenagers are spending too much, help them identify the non-essentials they can spend less on. Also, help them understand their spending triggers so that they can learn to eliminate them. That way, they will have money to save for future goals, such as buying a home or paying for college fees.
Allow Teens to Fail
While you may never wish for your teenagers to make financial mistakes, failures are part of the learning process and are sometimes inevitable even if they did everything right. Sometimes failure provides the best learning experience. Besides, it's better if teens can fail now when they're still under your care than to fail later in life. When they remember how a financial mistake made them feel, they will never want to repeat it in the future.
Help Them Track Financial Habits
Tracking their spending through charts and graphs lets them understand the financial progress they're making. When teens see the progress they've made in savings, it will give them gratification, hence the desire to continue saving. At the same time, it will be a challenging learning experience when they realize how much they've spent on unnecessary staff in a similar period.
Let Teens Take Finance Courses
Aside from talking to teens about money, one of the best things you can do to help them learn more about finances is encouraging them to take personal finance courses. This will allow them to learn almost everything they need to know about financial management. The courses can help emphasize all the money lessons you've taught them, and at the same time, expose the teenagers to other concepts you may have overlooked.
Start the Money Conversation With Your Teens
Talking to teens about money earlier will help them make better financial decisions, including staying out of huge debts in future. So, start the money conversation with teens right away, guide them through their financial troubles, and watch them make big financial steps in their life. However, if you are having trouble starting a conversation on your own, you can always seek help from financial advisors.