Parents play an important role in shaping their children’s financial behaviour and attitude towards money. Many teenagers rely on their parents to set the right example when it comes to managing finances. Of course it’s not always easy to talk to teenagers about money, particularly as they approach adulthood.
It won’t happen overnight, therefore you have to take each step with caution as you teach them towards what could be key in their formative years.
It is important that teenagers recognise the value of money and understand that it is not an unlimited resource.
Giving them the freedom to manage their own budget will teach them valuable lessons on how to only spend what they can afford, and avoiding the pitfalls of impulsive spending .
For many young adults, pocket money is the first taste of financial responsibility. Providing your teenager with a regular, set amount of money and the responsibility of paying for something they want gives them their first opportunity to practice how to stay within a budget.
According to the Money Advice Service, One way to get teenagers to take responsibility for their money is to give them a set budget for a specific task.
This could mean setting your son or daughter a monthly budget for their lunch. If they take this money and spend it on clothes, or going out, then they’ll learn a valuable lesson when they find themselves stuck having to go without lunch.
Part of teaching your teenagers how to manage their finances comes down to being strict with the money you give them and not bailing them out if they overspend.
Better they learn the hard way now while the amounts are small, rather than later when overspending can lead to debt problems.
Research has shown that nearly eight to ten 15–17 year olds who cover unexpected mobile phone expenses from their own pocket say they keep track of their income and spending.
When it comes to managing finances, many teenagers mimic their parents’ behaviour. So, if you are the type of person who saves up to buy something, then it’s more likely that your children will do the same.
If, on the other hand, you’re quick to turn to credit to fund non-essential purchases, your children are likely to follow in your footsteps. Likewise if you are a shopaholic and do so in the presence of your children, just know that they are likely to emulate what they see. It’s okay to enjoy shopping but you have to be careful not to overspend. Teach your children to spend carefully.
One way of setting the right example is by including your teenagers in some of your financial decisions, particularly as they reach their late teens.
It’s also a good idea to be open with your children about some of the financial mistakes you made when you were younger.
Sharing your tales of woe can be a good way to highlight the dangers of poor money management.
Whether this means telling them about the time you couldn’t afford to fix the fridge after it broke down, or how not getting your home insured cost you thousands after a burglary.