Last update: March 14, 2024 3:18 PM IST
Teen Money Habits
Unlike children, teenagers have the mental bandwidth to grasp basic money issues and understand the importance of money.
Money is undoubtedly one of the most important resources in the world today, but financial literacy is rarely taught to teenagers. As a result, most people grow up knowing little about money management and feel overwhelmed when faced with topics like investing, saving, and budgeting. What we learn as teenagers often stays with us for a lifetime. So it makes sense that we should teach our teens good money habits. Unlike children, teenagers have the mental bandwidth to grasp basic money issues and understand the importance of money.
Here are some tips for instilling good money habits in your teens:
1. Give an allowance: Giving your teen a monthly or weekly allowance will help your teen manage their money. Instead of allowing your child to earn money whenever they want, giving them a set allowance can help your teen learn how to track money. It will also inspire you to make decisions like saving money for what you want to get and spending it legally.
2. Provide financial education: Teach teens the basics, such as what a savings account is, what a term deposit is, what a mutual fund is, and how debt works. If possible, you can also open a bank account for them to help them become familiar with the banking system. In this way, they will learn how to manage their wealth beyond textbook knowledge of ‘profit and loss’ calculations.
3. Encourage Savings: You can encourage savings habits by first teaching teens the concept of wants and desires or delayed gratification. This way they won't just waste money on a whim. You can also set small savings goals for your teen and introduce a reward system to encourage achievement of these goals.
4. Teach your child to track their spending. Tracking your spending can help you identify patterns in your spending habits. Teens can better understand their financial decisions if they know how they spend. You can track your expenses using a spreadsheet, installing a free money tracking app, or writing them down in a notebook.
5. Involve your children in household budgeting. You can involve your teen in household expenses and inform them about electricity, water, insurance, and other utility bills. You can also take them grocery shopping and ask them to pay attention to how much basic household items cost. This will give you a direct idea of how to create a household budget.