By Joel Dansby* on Jul 16, 2022
If you’ve had to reconsider or drastically change your spending and saving habits because of the current economic environment, you’re not alone. But there may be an opportunity in this current market to teach good financial habits to your teenagers; ones that they can carry into adulthood. Just as our parents and grandparents developed their own deeply ingrained attitudes about finances, our teens can share the lessons we’ve learned through these recent times.
For many teens, money is seen as a means to an end. What money can provide— entertainment, clothes, food, etc.— is their payoff. If your family is cutting back, it may be a good chance to turn your teen’s motivators into lessons about personal financial management.
Get Them On Board
Teens are a part of your family’s financial picture, so it’s important to keep them informed on your family’s financial goals (especially if they directly impact your teen), the current situation, if things have changed and why, and their role in the financial strategy. Be clear that this doesn’t mean that what they enjoy will suddenly stop; rather, they should aim to be more accountable for their expenses and work to build an appreciation for financial management.
- Help them set their own goals and priorities. Work together to determine their needs and wants, and create a strategy to pursue what’s most important. It may be a good time to start a system for financial record keeping, whether that’s through apps, a journal, or a combination.
- Ask them to develop a budget based on their needs and goals. If your teen is looking at a bigger goal like buying a car or financing a trip, saving for their future needs should be a part of their budget. Both the expenditure and revenue sides of their budget should be discussed so everyone is on the same page.
- Get them to want to save. This can take time, but if they understand that their needs and wants will be financed from their savings, they will start to see the value in it. You may want to try further incentivizing them by “matching” their savings or making contributions to their larger goals.
- Show them the potential their savings could have. There are several calculators online that give a rough estimate of how their savings may grow over time. While the results are not exact and are only for illustrative purposes, they could be motivating.
Teenagers are adults in training, and if given enough opportunities, will become more responsible and may even enjoy smart financial management. While they can be motivated by their own wants and needs, if they understand the vital role they play in your family’s financial picture, they may even exceed your expectations.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2022 Advisor Websites.