Talking to your teen about money is ideal for helping them make sound financial decisions in their earlier and later lives. Seating your teen down and having a conversation about money and wealth will equip them with the proper knowledge to make informed financial decisions as they grow up. Here are five lessons to discuss with your teen.
1. How to Set Goals
Teach your teen about ways to set goals and the benefits of setting goals. This is a crucial consideration that can help your teen make sound financial decisions and grow wealth. Let your teens know that they need to set both long-term and short-term goals before spending money.
The best way to guide a teen is by doing this practicality. When they ask you for money to buy something or watch a game, ask them to plan how to spend the money. Look at the plan later, advise your teen on what they didn't do right, and help create a better plan.
2. How to Budget
Talk to your team about how to budget and why they need to. A teen should understand that before creating a budget, there needs to be income and expenses.
To test the understanding of your teen, give out some money and ask them to create a budget. Ask the teen to write down what they think are essential elements they need daily and create another list of the non-essential items.
If the teen knows the approximate cost of each item, let them indicate the cost of each item and come up with the final figure of how much they're going to spend against the available cash. Ensure the final list has fewer expenses compared to the income.
3. Discuss With Your Teen How to Earn Money
Teens should know that they cannot spend what they do not have. So, teach them several tips to make money and live a financially independent life. Ask your teen to write down several ways they think people earn money and check the list to discuss further how to make money from the listed business ideas.
You can also ask the teen to do some house chores and pay them for the work done. This will open their minds to several ways they can make more money.
4. How to Spend Money
Once you pay the teen, watch out for what they do with the money. You can wait for a moment and see the reaction before guiding them on what to do with the cash. You want to be sure that the teen can spend the money without wasting it.
Ask the teen how they wish to spend the money earned from doing house chores. You can also give various suggestions to the teen, such as going grocery shopping with you. When you go shopping with a teen, teach them the importance of spending money wisely. Let your teen focus on essential things and avoid impulse buying.
5. How to Save
When shopping with your teens, ensure they have some change left from the money you paid them. You can use that remaining money as a lesson to teach your teen about the importance of saving money. Let the teen know that life can sometimes be challenging with urgent needs coming up that require financial settlement, and this is why they shouldn't spend all they have at once.
They should instead keep some money in their savings account for future use, emergencies and investment. Your teen should know that having some money aside is comforting, empowering, and gives peace of mind.
Other Financial Plans to Discuss With Your Teen
Teaching your teen about money is one of the best life decisions to make. You will be surprised at how your teen will grow into a responsible adult with a stable financial future, making sound financial decisions.