by Kevin Sun
Learning money management skills will help teenagers be financially successful when they grow up. The Government of Canada highlighted this fact during the challenging coronavirus pandemic, encouraging parents to talk with children about personal finance topics.
But many parents find this a big hurdle to jump over. They might feel uncomfortable exposing the family budget, find it hard to get their teens to care, or be unsure of their own money skills. Here are 3 tips for teaching teenagers the money management skills they need for the future.
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1. Talk with Your Teenagers About How Financial News Affects the Family
You might not feel comfortable talking about your income and expenses with your children, especially in bad times. Instead of focusing on your own situation, start the conversation by talking about the news. For example, look at how the COVID-19 pandemic is hurting the economy and causing financial problems for many Canadians. Then explain how your family is dealing with this event, which might include strategies like using an emergency budget. You could even ask your teenagers what they would do if they were leading the household through this challenge. Stepping into your shoes will give them the chance to understand your financial decisions and help prepare them for when they’ll be in charge of their own money decisions.
2. Help Your Teenagers Find Meaning in Their Financial Future, Starting with the Present
Let’s face it: a lot of teenagers just don’t care about their financial futures. It’s normal for them to obsess over the present, and that’s why speaking the language of the now gets them interested. When teens see an immediate personal benefit, lessons make more sense. For example, if you’re trying to teach the value of money, then weave it into how you give an allowance. If you want them to learn good saving habits, then help them with managing their next pay cheque.
A teen will likely feel that money they earn is all theirs to spend, and they won’t be happy if an allowance they always got suddenly starts coming with strings attached. That’s why sooner or later, your teenager will ask: “What do I get out of this?” If you want to keep them on board with what you’re trying to teach, then your answer needs to make them feel rewarded.
How you reward them will depend on your preferred parenting style and the value you attach to money. For example, you could lower their do-nothing allowance to 50% but raise it to 150% if they work for it. You could match their savings contributions from their pay cheques or help them set short-term goals for buying expensive things they want. Even just telling them they’re doing great once in a while will help make them want to use the money management skills they’re learning.
3. Future Success Is Built on Past Mistakes – Let Your Teenagers Learn from Theirs
Let your teenagers taste small money management failures now so that they can achieve big financial success in the future. Not convinced? Just think back to how you learned to ride a bike. Did you do it by having someone hold onto the seat the whole time, or by falling off until you learned the right balance?
Letting your teenagers fail doesn’t mean stranding them on the highway. If you can support them without needing their money, then they can lose it without starving. And as teenagers, their own money probably isn’t much. Failing to balance a $500 budget now is a good deal if it teaches them how to successfully balance a $50,000 budget when they become independent. The sooner they learn from failure, the earlier they’ll start building success.
Another reason to let your teens make mistakes is so that they can take ownership of their successes. If you hold their hand the whole time and are too involved, they’ll give you all the credit for everything – good and bad. A hands-off approach will help them gain confidence in their own ability to manage money and develop financial responsibility. You could of course still give some saving and credit-building tips, show them useful resources like a budget calculator, and be there to help whenever they need it.
Help Your Teenagers Learn Money Management Skills by Helping Yourself
An important part of teaching money management skills is using them. After all, our children learn a lot from not only what we tell them, but what we do ourselves. If you’re facing a financial challenge, set a good example by seeking the free help and support available to you. A professional credit counsellor at a non-profit credit counselling organization would be happy to answer your questions and guide you towards the solutions you need. That way you and your teens can learn great personal financial skills together.