Your kids will learn about money. The question is, will they learn a gentler lesson now or will they be forced to learn harsher lessons later in life? Do your teens a favor and commit to teaching them the value of a dollar now.
In order to better appreciate the value of a dollar, teens need to be responsible for managing some money of their own. They also need to learn the concept of saving to pay for big-ticket items while still keeping up with expenses. Finally, they need to be exposed to the fact that parents are not 24-hour ATMs who can always be hit upon for another withdrawal.
Tip: Don’t look at teaching your teen about money as a bad thing. Finances are a part of life. Teaching your teens how to manage money and sacrifice so they can benefit later will help prepare them for college and beyond. When you get the urge to hand over cash to get a smile from your kid, stop and remember that you are following these steps for your teen's benefit, not for yourself.
The FDIC published a money guide for teens. Download it for free and share it with your teen. The information inside might help your teen understand why learning to manage money is so important.
Follow these steps to teach your teen the value of a dollar:
Set a monthly date when my teen will deposit money into a savings account.
Your teens will get a thrill out of watching the money grow and dreaming of the different things they can do with it. Make a point of explaining how interest works and how the longer the money stays in a savings account the more it will earn.
Tip: Once your teen has a certain amount of money in savings, start a new lesson. Take your teen to the bank to invest a portion in a certificate of deposit. Once it matures, let your teen decide where to put the base amount and gained interest—spend it, return it to savings, or roll it over into a new investment.
Expose my kids to people who have less than they have.
Your natural inclination might be to shield your kids from the reality of poverty, but helping people causes kids to appreciate how much they have. Do something together—volunteer at a soup kitchen, tutor underprivileged kids for a literacy group, or spend a day at a Habitat for Humanity site—and make it a monthly habit.
Note: According to Helpguide.org, lending a hand benefits the person doing the helping in several ways. Volunteering, for instance, increases teens' self-confidence and decreases their likelihood of depression. Volunteering also helps teens gain perspective on what they need vs. what they want.
Get my teen involved with the family budget.
Many parents would never dream of sharing their income and household budget with their kids. That's why kids often can’t understand why their parents can’t find money in the budget for the latest gadget. Have your child sit down and really look at the amount coming into the home and what it’s spent on. Your kids should see that satellite television programming costs more than they think. Ask your kids to help you cut some costs in the budget. They’ll likely choose the insurance and savings, so explain that those are non-negotiable. Explain that you could cut the food budget, but then name brand snacks would have to go. Maybe your kid will surprise you and decide to start contributing to the household income.
Tip: Clinical psychologist and award-winning journalist Dr. Lawrence Kutner recommends having your teen write out your checks (or enter the amounts in your online bill-paying system) and reconcile the amounts in your checking account. You should always double-check your teen’s math, of course, but this practice will prepare teens to manage their own checking accounts one day.
Talk to my kids about the advertisements they see on television.
Advertisements geared toward teens can be especially persuasive. Teens are already struggling with an increased need to fit in. Many ads send the message that teens need an expensive product to do just that. Kids get mixed messages from parents, the media, and their friends (who seem to get everything they want). Talk to your kids about who makes advertisements and why they make them. Try to make your kid see that a business's goal is to earn money and that ads exist to make consumers think they need to buy products. Teens who understand they're being played by big businesses are less likely to give up their hard-earned cash.
Help my child to get and keep a job.
Part-time jobs offer all sorts of benefits in addition to a paycheck. They teach teens skills, such as time management and responsibility. Kids who work also tend to feel more confident in their ability to take care of themselves. The paycheck, however, will help your teen most appreciate the value of a dollar. They’ll get a real-life look at how many hours someone needs to work to make a decent wage. They’ll also gain experience managing their incomes.
Warning: Some kids get a little carried away with the feeling of earning their own money. Always remember that schoolwork and fun with friends are important parts of a teen’s life. Teens should work no more than ten to fifteen hours per week during the school year. However, students who work ten to fifteen hours per week tend to have better grades than students who don’t work at all.
Review my own attitudes and behavior toward money.
Kids often inherit their parents’ way of dealing with money. Don’t use a credit card to splurge on unnecessary items that you feel you deserve. However, don’t become such a miser that you never allow yourself any treats. Dr. Kenneth Doyle, a psychologist who specializes in how people deal with money, suggests that the biggest financial problems occur in kids whose parents were overly controlling of their kids’ money. Teens’ burgeoning sense of independence isn’t restricted to choosing their clothes and friends. They also need to feel responsible for their finances.
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