How to Teach Your Teenager How to Budget and Save?
Budgeting and saving money is a difficult task even for adults. Many people today live from paycheck to paycheck as they haven’t mastered these two habits. In some cases the only opportunity for these people to cover all bills is to get a loan for bad credit history and you don’t want this to happen with your kid when it grows up. This is why parents need to teach their children how to budget and save money while they are still young. Here are ways you can help your teenager solidify their budgeting and saving skills.
Model Good Money Management
Saving and budgeting would be hard if your teenager doesn’t know how to manage their money well. Good money management skills involve self-discipline, critical thinking, and organization. Teach your kid about the physical currency and banks where they can save, ways they can earn extra money, and how to do comparison shopping.
If you aren’t comfortable talking to them about your income and expenses, you can talk about the general financial news and how it’s affecting the family. Then explain or let them suggest some strategies they can use to address financial problems.
Additionally, remember to allow them to make small money management failures so that they can work on them for a better financial future.
Make Your Budget with Your Kids
It is one thing to teach them about budgeting and saving and another to let them participate. Involving your teenager when budgeting allows them to learn how it’s done.
Getting them physically involved in the family budget makes them feel valued and know your family goals. Therefore, the lesson sinks in deeper.
There are several ways you can involve your kids in the family budget, other than just writing it with them. For instance, you can pay for some expenses using cash to allow them to understand what 100 dollars can buy and how long it can last.
You can also teach them comparison shopping. For instance, if you have $50 for fruits this week, ask them how many bananas vs apples that amount will buy. Explain the price difference in items and the amount they would save if they considered the cheaper option.
Educate Them on How to Manage Their Finances Responsibly
Most teenagers only think about spending money when they have it. However, parents can help enhance financial literacy and help them make smart money decisions.
You can start by setting a bank account for your child, either a checking or savings account. You can also give them a debit card so that they don’t waste money with cash purchases. Such accounts allow you to monitor their spending and advice accordingly.
Additionally, put them in charge. Rather than buying everything in the house, give them some money a few times a year and let them know that it will last them until the next “payday.” Doing so will help them live within their budget and resist impulse buying.
Also, talk to them about credit scores and how to keep them high. This will boost their financial health. While your child may not have a credit card, talking about credit is crucial. So that by the time they get one, they’ll remember to pay their debts and bills on time.
Encourage Them to Handle Their Own Money
The best way to teach them to budget and save is not interfering with their money. Giving your child money freely all the time will not help them see the importance of budgeting and saving for the future. On the other hand, when they work hard for this money, they will see the need of using it well.
Rather than giving your child money anytime they want, enlighten them about money-making opportunities and let them pursue these opportunities. For instance, you can help them get a part-time job, or let them babysit or do chores in the house and pay them.
Money earned is better than money received. Then, remember that your work is only to guide them to use the money correctly. So, once you teach them the benefit of saving and budgeting, let them take the steps to do so themselves.
Help Them Set Up Their Bank Account
Setting a bank account for your teenager is a significant step in securing their future. A saving and checking account helps them achieve financial independence. It eliminates begging and pleading for money. And when they work hard for that money, they will be attuned to how it leaves their account. As such, it helps them budget and gain insights about their spending.
Also, having an account will help them save while at a young age. As such, they will develop good savings habits, which allows them to think about their retirement early.
Additionally, a bank account will teach your teenager to budget and set direct deposit, which is an important habit to learn early.
Budgeting and saving aren’t easy habits. It’s why parents should start teaching their kids at an early age. You can also seek digital help by suggesting budgeting and savings apps to your teenager.