Why You Should Discuss Financial Matters & Money Management With Your Teenager

If only I had a dollar for everytime I have said those words whilst parenting my three darling 'rugrats' as to why they cannot have this, that or the other 'must-have thing' that they desire!

With that said, it is one of your responsibilities as a parent to ensure that your children grow up with a balanced understanding of money and that they develop healthy financial management habits.

In this day and age it is very important that our children learn from a relatively young age about the importance of money management.

Although not as crucial in their younger years it is an absolute must as a child enters teenage-hood and is handling money on a regular basis especially because of modern-marketing methods and social networking constantly bombarding our child/children with offers urging them to part with their money (which is really our hard-earned money).

Knowing all that there is to know about money and financial management as well as their rights as a consumer will help and encourage our teenage child/children to become discerning spenders.

As a child grows into a teenager money grows in importance as their need for money rises as their social life increases and 'peer-pressure' becomes more prevalent.

It is also a time when they start to earn an income of their own, albeit part-time after school or on weekends.

For us parents, the teenage years are turbulent enough and these years require a delicate balance between keeping some control of your child's finances and gradually handing over more and more responsibility to them as they gain confidence with handling money.

During a child's teenage years, parents should be a guide for their child's financial development rather than come across as a strict teacher.

It is an age where usually the first, costly financial mistakes are made and as a parent you need to allow your teenager to make those mistake/s as it is part of growing up and learning about the true value and importance of money management.

Your role is to be there for them to be able to limit the amount of 'financial damage' that is done.

With teenagers, more so than any other group, managing money must have a purpose.

One way for parents to help their son or daughter to put into perspective the reason for money management is to discuss with them what their lifetime goals are (bearing in mind that they could possible change over the years) and ask them how they intend to plan for them and change them from a dream/goal into a reality?

By doing this and even getting them to write up a 'timeline' of when they would like such things to happen will help your teenager to understand why they need to save and manage their money responsibly as well as for them to be able to recognise that in a few years they will want to buy a car and probably go onto higher education and to do so will require money.

Whenever you are speaking to your teenager about money and money management always try to relate the idea of why you need to save money as a means to an end, in other words relate the ideas of money management to practical situations, this will make it much easier for your little darling to understand what you are talking about.

As you give more responsibility over your teenager's expenditure you will need to determine which expenditure/s that you will turn over to them and which you as a parent/s will still pay for.

Major living expenses should still be met by the parents until they earn a full-time wage.

You will need to help them to develop a more detailed and precise budget to follow.

This will take time and patience on your behalf as most teens will rebel against the idea at first until it dawns on them that they never have enough money to do everything that they desire and that mum and dad always say stuff like "we are not made of money" or "do you see a money tree growing in our garden".

If your child puts pressure on you to provide them with a Credit and/or Store Card what should you do? Well, you have two options agree or disagree to their request.

If you agree, then you must remember that if your child is under 18 you are held responsible for their debts.

The major problem with all forms of credit cards (including store charge cards which are usually the first credit card that a teenager seems to acquire) is the interest that is to be paid.

Unless you pay the full amount owed on your credit card each month then the interest will accrue and push up the amount owed until you have paid it off.

Credit can be such an insidious thing, so easy to use but yet so difficult to manage sensibly without getting into financial difficulties.

One option is to open up a Savings Account/Debit Card which has the drawing option convenience of a Credit Card but most importantly you must have the funds already saved in your bank account.

Although, not 100% foolproof, this type of account still requires effective financial management skills as the money could be easily withdrawn to a zero balance in next to no time.

In my opinion, I believe that it would be impossible to handle credit until you have learned how to handle cash and appreciate the true value of money and money management. Until then I do not think that giving a teenager a credit card is a good idea.

Teenagers must also be taught about credit and that they must understand that when someone gives them credit that they are trusting you to pay it back.

Credit is not money for nothing.

Credit enables you to buy now and pay later usually with an additional fee but it must be paid out asap and that it needs to be used wisely or financial mistakes will be made.

If used they way that it is intended then there is nothing wrong with credit as it is useful and convenient but as with all things, it must be treated with respect and be kept in perspective so it is imperative that parent's reinforce that credit is a privilege and not a right and that your teenager understands the ramifications of using credit.

Just remember that it is you the parent's whom become the role model for your child/children to learn from so be prepared to discuss financial matters openly with your children citing practical examples to help them to understand why they need to be money-wise.

They need to know that if they are prepared to work hard and smart that they will eventually reap rewards for their success both personally and financially.

Real money is not 'monopoly money' and in the real world you would be extremely lucky to collect $200 just for passing go!

I truly appreciate the time that you have spent reading my Hub Article and I hope that you have found it to be beneficial.

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UrsulaRose

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