It is not a simple task to teach your teenager son or daughter the importance of money management and/or tips on saving money. Despite that, it is vital for us to tell our children the importance of personal finances.
Before sitting down with your teenager kid to talk about the value of saving and money, you first have to understand their needs and wants. This can be done by understand the areas where they spend their money. Most often, teens tend to spend money on food, apparels, concerts, movie tickets, etc. Thus, you can begin taking about such needs so as to get them engrossed in the conversation. Once, they are hooked in and receptive, you can begin teaching the importance of money.
Listed below are some money saving tips for teenagers.
1. The importance of investment over expenditure
Talk to your teen about why money is not there just for spending and the real value lies in investing it and creating more money. Tell them the benefits of investing money over the long term and how it will help create wealth for them. Make them understand that salary or wages are not sufficient to create and increase wealth.
You can take the example of your own house to make them realize the value of investment. You can tell them the amount of money that you are paying into the house and the possible value of the house in the future when he/she inherits it from them. You can also point out how investing just 15 percent of their income on a portfolio with a return rate of ten percent will end up becoming more than the yearly salary.
2. The importance of making a budget
A budget will permit your teen to foresee the amount of money that they will have at a later date and the number of days required by them to accumulate a certain sum needed to purchase something that they desire. Budgeting will also impart them to be on the lookout for unwarranted expenses which are in excess of their total income.
Parents may also provide financial projects such as asking them to find out the best deals for computers or other items using a fixed sum of money. Most teens are skilled at scouring the web for information. Making them use such skills to find the best-value rates and promo prices for varied items will keep them engrossed in the project and allow them to learn the nuances of budgeting.
3. Offer practical lessons in money management
As adults, we are well versed with managing our money. However, we often fail to realize that our children may not be aware of the differences between a checking account and a savings account. It is therefore a good option to engage your teenage kids in simple household finances. You may involve your children in different financial activities such as payment of bills, depositing money into bank accounts, check book balancing, and withdrawal of money from your accounts, etc. These will offer a practical view of the manner in which money works to the kids. It will also help the teens understand and better appreciate the level of time and effort that parents put in to make money and use it for the betterment of the family.
