Teaching teenagers how to manage their money is a critical skill that can be passed on by parents. And they need all the help they can get.
You’d be surprised how little teenagers know about saving money
Until they got their first job, they never thought about budgeting their money, how to be exactly aware of what it takes to pay for all the cool things Mom and Dad got. Even some who have some notion, they do not develop this ability on their own. That’s where you come in.
Whether it’s a grant or the money they get from your first job, use this opportunity as a teaching moment. It is recommended that teens divide their money into thirds; 30% to contribute to household expenses, 30% to spend and have fun, 30% to savings and even 10% to a charity to the needy.
It is important for teenagers to realize early on that a portion of the money they make needs to be earmarked for things that are considered obligations, just as they will be when they are adults. Things like income, insurance and utilities are obligations that every adult has and the sooner a teenager learns this, the better. It is interesting to be invited to contribute 30% of your salary to domestic expenses, this is true for expenses such as rent or gasoline, which benefits the whole family.
Teach teenagers how to save money
They should also be taught to save a good portion of the pay, this is a good tool that can instill the responsibility and habit of saving. Parents can teach them how to open an account at a bank or a credit union and how to move money between a checking account and savings. If they have accumulated a good amount in savings, they may consider opening a savings account that can even be used to pay for the future college partially or draw letter.
Of course, both work and no purchase is not fun
Teens should be able to spend a portion of what they have on anything they desire. This may include makeup, new sneakers, clothes, etc. They can also save for something they want, but it does take a while to buy, like a new Smartphone or video game.
Teens need boundaries and guidance and need to be taught skills for things they have never done before. Managing your money is one area they may need help with, and you as a parent can guide you through this transition into adulthood.
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