Parents constantly worry about the future of their children. Here are 5 signs you need to look out for as a parent to keep your kid from hurtling towards financial disaster.
As a parent, a key life skill that you must teach your kids, especially when they are in their teenage years, is money management. Parents play an important role in shaping their kid’s outlook towards money. If, as a parent, you do not teach your kids the art of navigating through the tricky waters of money management, then they may end up financially worse off in the future.
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Also, when it comes to personal finance lessons, it isn’t enough to just teach your kids and assumes they got the point. Instead, you need to constantly check if they put what they learnt into practice. This can be quite a task, which is why we’ve identified five common signs that signal your child is heading towards financial ruin. Address them before it’s too late!
- Wanting everything new
The new generation is all about the now. They want everything now. Right from new gadgets to clothes, shoes, and more.
40-year old Neelima, mother to two teenagers, said, “They always bought whatever new hit the market. Of course, I wanted them to have the best of everything. But this is not how it should happen. So, I decided to teach them a little about savings and delayed gratification. I started to give them a certain amount every month (like a salary, but for doing nothing!) and they had to manage all their expenses with that.”
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- Overspending pocket money
Pocket money is an effective tool to teach kids the basics of money management. But sometimes what happens is that kids tend to spend their entire monthly allowance within a few days into the month. And then they demand more money. The key is to not indulge them.
If you keep giving them money whenever they ask for it, they will never realise that they are overspending. This is one habit that will certainly hurt them financially in the future. The best solution is to teach them how to budget and save for large or expensive purchases.
If they are always running out of pocket money, you can encourage them to find a part-time job instead of giving them more money. This way, they’ll understand the fact that money doesn’t come easily and will learn to be more careful about spending it.
- Not being aware of family finances
Discussing money matters with kids isn’t a common practice in our country. Usually, it is because parents feel that money matters aren’t for kids or parents take the time to discuss such matters with them.
Joanna Krishna, a 50-year old café owner, said, “My husband and I wanted to start our own café. We gave up our jobs and started working towards our dream. There were a lot of sacrifices, especially financial sacrifices, which we had to make in the initial months. And it was really difficult to make our kids understand why we had to limit our spending budget. It was only after we sat down with them and explained how our café dream was affecting our finances that they calmed down.”
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Teenage kids are old enough to understand the financial conditions at home. When they do not make an effort to learn about it or contribute their bit, it is a sign of danger. So, watch out, parents!
- Too much peer influence
Teenagers are easily influenced by anything and everything around them. But it’s usually their friends who have the most influence over them. Lionel George, a 32-year old accent trainer located in Mumbai, says, “My best friend in high school was super rich. He used to wear branded stuff all the time. And I was so influenced by him that I used to pester my parents to buy me all the expensive stuff too.”
He adds, “I belonged to a middle-class family. My dad used to work almost 12 hours in a day, so we could make ends meet. But I didn’t care about all this then. All I wanted was to keep up with my friend. Even when I started working, I used to spend all my earnings on useless stuff just to show off in front of my colleagues and friends. It was only when my mother was hospitalised last year that I realised how this peer influence-based spending has spoiled me.”
It was pretty evident that Lionel was heading towards financial doom early on. Unfortunately, there was no one to guide him and he had to realise it himself. But, if your teenage kid is acting the way that Lionel did, it’s time you sat down with him/her and had a heart-to-heart chat. The earlier this problem is taken care of, the better it is for your child.
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- Borrowing money from friends/relatives
Is your adolescent kid always borrowing money from his/her friends or cousins? Many times, when parents refuse, teenagers seek money from friends. If your kid has been indulging in this behaviour frequently, then he/she is hurtling towards an unhealthy financial future. It would be best that you talk to him/her and nip this problem in the bud.
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Financial habits acquired during one’s teenage years set the stage for the future. Your kids will definitely appreciate all your little lessons when they are older and start dealing with money on their own.
If you have any queries on how to help you teenage kid learn about money management, drop us a comment in the comments section below. Or, you could just head to our website and explore a little.