Teenagers often spend money frivolously. Before they go to college, you must teach them how to manage money smartly.
Is your teen always pestering you for that latest Virtual Reality headset or the hottest fashion outfit? Are you tired of their shopping sprees at the multiplexes or binge parties with their friends? Then, it’s time you gave them some lessons in money management.
They should understand that money has to be saved in Fixed Deposits and Mutual Funds for various expenses such as their higher education and your retirement. Spending too much money now will mean lesser money during those years. Here’s how to teach them about the importance of money.
Additional Reading: How To Make Your Teen Money-Savvy
When you say “money doesn’t grow on trees”, your teen says “yeah, it’s available at the bank and ATM”? Teenagers hate repetitions. Don’t give them lectures on money. A better option will be to include them when you are planning your monthly budget. That way, they will understand how much you spend and how much is saved. Knowing your fixed expenses such as Home Loan and Personal Loan EMIs will tell them how expensive buying a home and running it is.
No Comparisons, Please!
Stop yourself the next time you say “your friend has got better marks than you”. The comparison will not stop there. They will talk about how that friend wears better clothes and has got a classy smartphone. Instead, tell them how you want them to fare in school. Set your expectations at the start of the school year.
Similarly, in case of money matters, tell them upfront about how much you will give them, why you are giving them only that much and how they should ideally spend it. This will ensure that they don’t expect a lot of money from you.
Make Them Prioritise
Your teenager wants that new Puma shoes as well as that latest Xbox game? Tell them they can have only one of them. Ask them to make a list of the things they want and let them prioritise the items on the list by putting the most essential things at the top. Putting their needs over wants is the first lesson in money management.
Additional Reading: 7 Super Smart Savings Bank Account Options For Your Child
Ask Them To Track Expenses
Show them how to track their expenses on a daily basis. They can use money apps or the Notes app on their phone to note down their expenses. They can use a notebook if they don’t have a phone. Ask them to put the expenses in categories like allowance received, transport, food, clothing and entertainment. This will tell them whether they are overspending on needless things. This will also tell them whether they are able to save anything from their allowance.
You can choose to open a zero-balance Savings Account in their name and provide them with a Debit Card. They can learn to withdraw money from the ATM. Their spending will get automatically tracked if they have an app like the BankBazaar Mobile App. However, this may not be safe if your teen tends to be careless about their possessions. Instruct them not to disclose the PIN to anyone and not to give their card to their friends.
Help Them Make A Budget
If they want the latest gadget or the trending dress, help them check if it is affordable or expensive. Teach them to set a budget for each of the items that they want in the short term as well as the long term. They have to stick to the budget every time. If they don’t stick to the budget, cut down on one of the items from the list of items that they want.
Set A Goal
Give them a savings goal for the month. For example, if you give them Rs. 500 a week, see if they can save that amount in a month. If they manage to save some money, tell them you will add 10-20% of that amount to their allowance next month. This way, they will always manage to save some money from whatever you give them.
Give Them Money Tasks
It’s very typical for parents to ask their teens to run errands and provide money for those errands. You must also try to give them some money and ask them to spend it on essentials. For example, give them some money and ask them to buy pulses and spices. See how their choices turn out and check if they are able to save money. If your teen has an older sibling, pit them against each other and see who shops better. They will learn from their mistakes and try to outdo each other in saving more.
Additional Reading: Must Know: Important Money Lessons For Teenagers
Teach Them To Look For Discounts
Take them for those supermarket trips and show them how to look for discounted products. You can tell them how you get discounts on certain products when you use your Debit Card or Credit Card. They should also look for student discounts when you go on vacations with them. Most amusement parks and entertainment places offer discounts for students.
Want discounts when you go abroad? You can consider getting the International Student Identity Card. This card is available for Rs. 500 for all students over the age of 12 years. You can get discounts for your teenager on almost every expense including flight tickets, hotels, food, and shopping when you use this card. This is valid in more than 125 countries. You can get discounts both online and at the place where you shop.
The more often you talk about money to your teenager, the more aware they will be about spending and saving. Want to check out a financial product along with your teen? Here’s all that you need!