Even though money is undoubtedly one of the most important resources in today’s world, teenagers are rarely taught financial literacy. As a result, most people grow up with very little idea about money management and get overwhelmed when faced with topics like investments, savings, and budgeting. The things we learn as teenagers often stay with us for life. Therefore, it is a no-brainer that teenagers should be taught good money habits. Unlike kids, teenagers have the mental bandwidth to grasp basic money matters and understand the importance of money.
Here are some tips to instill good money habits in teenagers.
1. Give them an allowance: Giving a monthly or weekly allowance will prompt the teens to manage their money. Instead of allowing your kids to get money whenever they want, giving a set allowance will teach the teens to keep track of their money. It will also inspire them to make decisions like saving up money for something they want to get and spending it judicially.
2. Give them financial education: Teach teenagers basics like what is a savings account, what is a fixed deposit, what are mutual funds, and how debt works. If possible you can also open a bank account for them so that they get familiar with the banking system. This way, they will move beyond the textbook knowledge of ‘profit and loss’ calculations and learn how to manage their wealth.
3. Encourage saving: You can encourage saving habits in teens by first teaching them about the concept of needs vs wants or delayed gratification. In this way, they will not splurge on just a whim. You can also set small saving goals for teens and introduce a reward system to encourage them to achieve these goals.
4. Teach them to track expenses: Tracking one’s expenses helps the person see a pattern in their spending habits. By knowing how they are spending, teens can better understand their financial decision-making. One can use a spreadsheet, install free money-tracking apps, or just jot down their expenses in a notebook to track their expenses.
5. Involve them in household budgeting: One can involve the teens in their household expenses and tell them about electricity, water, insurance, and other utility bills. You can also take them for grocery shopping and ask them to pay attention to how much the basic household things cost. This way they will get a first-hand idea of household budgeting.
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