To build furniture from IKEA you have a manual. Your blender, vacuum and car come with a manual. But, the biggest part of our life doesn’t come with a manual….children. Not only is raising children hard without a manual, it gets even harder when your children become teenagers. These six steps won’t help with every teenager issue, but it can help you teach them how to manage their money.
Step 1: Ensure They Have Money
How is your child supposed to learn about managing money when they don’t have any money to manage? Either you need to provide an allowance, pay your child for jobs around the house, or encourage them to get their own job. The first step to managing money is making some. Help your child learn to earn money.
Step 2: Open An Account
Once they have money to work with, open a savings account and a checking account in their name. Give them a debit card and teach them how to make deposits and keep track of their money. Sign them up for online banking so they can keep track of their money online. Also set up automatic withdrawals from their checking account to their savings account so some of their money is being saved each month.
Step 3: Give Them Responsibility
Once your child has money to work with and an account, give them some “bills” they are responsible to pay. Options include buying their own gas for their car, paying the own insurance or buying their own lunch each week. These simple “bills” help your teen learn that bills come whether you like it or not. It teaches them that bills come before pleasure. It teaches them if you don’t have the money, you have to sacrifice.
Step 4: Let Them Face The Consequences
Part of learning to manage money is facing the consequences when the money runs out and the “bills” need to be paid. If they spend all their money on a movie with friends, don’t bail them out and pay for their gas. Require them stop driving and figure out how to get where they need to go on their own. As hard as it may be, this will teach your teen the importance of keeping track and budgeting money.
Step 5: Avoid Credit Cards
Having a credit card is a good way for teens to learn how to manage money, AFTER they have shown they can be trusted and somewhat manage their money. Once they learn that the money on credit cards has to be paid back with interest, and has to be paid on time, find a low limit credit card that works to help them start building credit.
Step 6: Set The Example
The best way to teach your teenager about managing money is to be an example they can follow. Pay your bills on time, save money each month, stay out of credit card debt, live within the money you make. Each of these ways will teach your teenagers by example that managing money is important to you and should also be to them.
How do you teach your teenager to effectively manage their money?