Before your child goes to college or leaves home, it’s worth talking to them about money and how they will manage their cash when they are responsible for paying their own bills and rent. Taking the right steps to teach them financial responsibility early on could help them steer clear of debt problems further down the line.
Learning financial responsibility
A good way to introduce the idea of financial responsibility is by paying them for chores, or encouraging them to get a part-time job. Perhaps you remember how you felt when you realised how many plates you had to wash before you would earn enough to buy what you wanted? This is a really valuable lesson for teenagers, who are old enough to understand what it means.
If your child wants to learn more about managing their own money, you could help them draw up a budget so they know how much they spend on things. Teenagers are usually really comfortable with technology – sometimes far more so than their parents. You’ll find interactive budgeting tools online that add up the numbers for you, or a simple spreadsheet will do. Get them into the habit of recording and understanding their income and what they spend – this is the basis of a budget.
Many teenagers want to behave, and be treated, like adults, but adulthood comes with responsibility. The more responsibility you can give to your child, the more grown up they will feel, which is likely to boost their confidence. Whether you achieve this by letting them take a part-time job, or by insisting they make their weekly or monthly allowance last the duration, it all helps them to gain independence and take those first steps towards adulthood – hopefully avoiding bad money habits later on.
Help your child along the way
However, teenagers are still kids until they hit adulthood! You can trust kids to behave like kids. It’s difficult to strike the right balance between letting them live their own lives and still being there for them when they need you.
One way to achieve this are to gradually reduce the amount of money you give to them, after a point that you both feel comfortable with. For example, you might find you’re still helping them financially after they’ve left home, but you could make sure they know you’ll gradually taper off the amount of money you give them, so they rely on you less and less. Just bear in mind that ideas like this won’t always go according to plan: all too often, real life gets in the way.
If you’re worried they haven’t got the hang of budgeting for bills and rent, there is a kind of bank account that can help them with budgeting. This type of account actually puts money into a separate account for the bills and rent and leaves the rest for spending money, helping them to live within their means.
Finally, encourage saving from an early age. If you set your teenage child a goal to work towards – like their first holiday without their parents, or their first car, it can really help to keep them motivated.
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