Growing up, I never fully understood the concept of financial responsibility or how my parents managed their finances. I had no appreciation for the naira note nor how to be a thrifty shopper. I was ill-prepared to manage a budget or make wise money choices as a college graduate. As I got older and more financially conscious, I realized that if it wasn’t for my minimalist parents, their wise decision to open a kiddies account for I and my siblings as well as generous relatives with deep pockets, I couldn’t have imagined where we would be today, financially speaking.
Several life lessons opened my eyes to the
importance of financial responsibility which is why I think it’s incredibly
important to teach young children how money works and how to wisely use it.
If you asked most teens or kids in their pre-teens
what it means to be financially responsible or if they have a teens account, I am sure you will get a lot of remarks masked in
confusion.
This is why I will like to share some practical
ideas for imparting financial responsibility in your teens as you prepare them
for their future.
How to Teach Your Kids Financial Responsibility
Having that money talk with your kids as they grow
older may be a hard nut to crack. With this in mind, I have curated a checklist
to help you prepare your kids as they navigate the tricky waters of personal
finance;
1. Be the example:
Several teens rely on their parents to set the
right example when it comes to money management. As parents and guardians,
we play a crucial role in shaping our children’s financial habits and attitude
towards money.
A great way to set the right example as your teens
grow older is by including them in some of your financial decisions. An
example, showing them how you get better deals on groceries, or how you use a
budget planner for your monthly expenses.
Let them in on your budgeting process for household
supplies, essential bills and gradually introduce them to how you sort your
taxes or pay your mortgage.
Very often, children mimic the financial habits of
their parents or guardians.
If your children see you as the type of person who
saves up to buy something, then they are more likely to do the same but if they
notice you’re quick to turn to credit to fund non-essential purchases, they
most likely follow suit.
2. Give your teen the freedom to manage their own
budget:
This will teach a vital lesson and help them
understand that money is not an unlimited resource.
Allowing your teens manage funds early will help
them recognise the value of money and teach them the importance of spending
only what they can afford, help them avoid the drawbacks caused by unplanned
expenses.
You can also introduce them to banks with teens
account and talk them through everything they need to know to ensure open the
right account.
3. Pocket money and budgeting
One of the ways to teach teenagers financial
responsibility is giving them a set budget for a specific task.
Pocket money offers the first taste of financial responsibility
to a lot of children. Giving your kid a regular amount of money and the sole
responsibility of paying for things they like, offers them the first glimpse
into life and how to stick to a budget.
An example could be providing them with a monthly
budget for their meal and allowing them spend the funds as they like, if they
choose to spend the money on other things other than their meal and they run
out funds, they’ll learn a valuable lesson about budgeting and discipline.
Teenagers who receive a regular, fixed sum are
likely to keep track of their financial income and spending. A crucial part of
teaching your teenagers how to manage their finances is to be strict with the
money you give them and ensuring you rarely ever bail them out when they overspend.
This will teach them that overspending can lead to the problem of debt.
4. Share tales of your financial mistakes:
Opening up to your kids about certain financial
mistakes you have made in the past and how they hindered you is a good idea.
These stories are a great way to highlight the dangers of poor financial
habits. This could mean telling them about how you incurred debts because of a
bad spending habit on unnecessary items.
By sharing some of the financial mistakes you made
when you were about their age, you will be teaching them valuable financial
lessons.
5. Help them Develop a Savings Culture:
Teaching your kids, the importance of saving and
only buying the things they need is a crucial part of shaping their adult life.
This could means encouraging your kids to set aside
a small amount every month to buy a new pair of shoes, or teaching them how to
save long-term for bigger projects.
This habit and financial discipline will make it
easy for them to achieve their long term goals of going to college, paying
their mortgage or buying a car as they become adults.
Talking to teenagers about the need to save can be
quite tasking, so it’s a great idea to introduce them to saving by leveraging
their interests.
If your kid is interested in fashion, you can help
them out work out how to meet the cost for items they will like to get. This
could mean teaching them to set aside a certain amount of money monthly or
helping them secure a part time job.
6. Teach them how to manage their first wage:
Helping your teenager secure a job is one of the
important steps to financial independence. This will also help increase the
amount of disposable income they have access to.
Younger kids who still go to school can take up
informal employment like babysitting for family friends, while teenagers over
the minimum school leaving age can take up full time employment. This will
play a key role in preparing them for the future and is also a great opportunity
to in-still in them the importance of saving some of their earnings for rainy
days.
An
example could be, if your teenager would like to buy some fashion items, make
up or the latest PS4, you can show them how to set-up a standing order to
their savings account on
every pay day. This way, their savings is automated and it so much easier to
stick to a budget.
Image Source: Unsplash cc @blankerwahnsinn
Written
by: Mariama Barry
