Teaching Your Teenagers Financial Responsibility
Every year, communities, banks and foundations across the US spend billions of dollars to teach young people financial literacy and responsibility. Despite these efforts, evidence suggests that they may not be having much effect. Fiscal responsibility may be one of the most important things you will ever teach your child. Here are 3 ways to teach financial responsibility to your teen.
1. Give them money for things you generally buy them and help them set a budget to use it
Whether you give them a set amount of money to buy their own clothes, or money once a week to buy their own lunch, making them responsible for buying something for themselves will help them understand just how far a dollar actually goes and that money doesn’t grow on trees. If they blow through their money or don’t spend it on what it’s intended for, it’s important to not bail them out by just giving them more.
2. Teach them about trade-offs
Trade-offs are a simple fact of life. Everything you say “yes” to automatically requires you to say “no” to something else. Purchasing a new thing often requires getting rid of an old thing and buying one thing often means you don’t have money for another. Instead of simply buying a new phone for your teen, have them trade-in or sell their phone and pay a part of the purchase price for the new one. If your teen wants new clothes, have them sell or trade in some of their old ones. If they don’t have anything they are willing to get rid of, they probably don’t need anything new.
3. Give them opportunities to earn money instead of just giving them money
Instead of just giving them money to buy clothes or go to the movies or on trips, give them opportunities to earn it for themselves. Not only will earning their own money inherently make them more conscientious about spending it, but it will make what they spend it on more enjoyable. People in general most value what they have to work the hardest for.
While it may seem impossible to teach your teen anything, you can actually do the best by simply refusing to simply give them money for things they want or need. As the adult, you have far more control than you think you do, you just have to exercise it. Setting some financial boundaries now will help both you and your teen immensely down the road.