Teaching teenagers money skills can sometimes seem daunting, but these tips will help you get off to the right start.
Teach How To Save Money
Have your child put a certain percentage of all their earnings (including allowance) into savings for emergencies. As the children grow older, they will begin earning money (either from chores around the house or from tasks like raking a neighbor's lawn). Teach them that not all of their money can be allocated towards "fun" items, but instead some must be put towards savings, charity, and whatever else you want to teach them to save for. If they don't already have one, set up a savings account for them to begin saving for items like college or a first car.
Include Them In Family Financial Discussions
While you may not want to let them know everything about the family finances, it can be very useful to include your older kids in some of the family financial discussions. Start small and talk about how the family should spend their discretionary money. Be sure to keep the conversations positive and don't let the children feel as if the family is broke. However, on the other hand, it is important to emphasize that there is not enough money for everything we want, so choices must be made.
Have Them Purchase More of Their Own Items
Continue to give them more money to manage on their own as they grow older and prove that they can manage small amounts. Items that you could provide them money for (and have them manage) include: lunch money, money for entertainment, money for clothing (or some clothing), and money for decorating their room. Another way to teach them to manage money is to have them buy holiday gifts for everyone out of a set amount of money. This will teach them how to budget and prioritize.
Have Them Create a Budget
The basics of budgetting can start young. Have them list all of their income on one side (including allowance, misc. work, birthday money, etc.). Then, on the other side, have them list all of the things they want to spend money on (including fast food, going out with friends, movies, clothing, music, etc.). Have them calculate the total amount on each side and balance their budget by changing the numbers until it works. Then, review with them at the end of the month or week how well their budget worked for them and adjust it for the next month.
How To Teach Your Kids Good Money Habits
Many of the bad money habits that adults have are a result of how they dealt with money as a child. If you can teach your children how to manage money responsibly at a young age, then you will set them up for success later in life.