by Julie Jaggernath
Teaching teens to budget helps improve their money management skills when they grow up. But it’s not something that can be learned in the classroom. Learning money skills requires practice in real life settings. Teenagers who earn their own coin can better understand financial concepts like saving and spending. As long as it doesn’t interfere with school, working a part-time job can be a great educational experience.
How Working Helps Teenagers Learn Money Management
Part-time jobs help teach young people the value of money. It’s a lesson in taxes and the difference between gross and net income. They learn how long it takes and how much effort they need to put in to save up a specific sum. Shopping with your own hard-earned cash is a lot different than having parents lay down the plastic. Whether your teenager is a 14 or 18 year old, help them create a budget plan that includes their income (even if that’s just allowance) and the expenses they are responsible for paying (e.g. entertainment, personal care products, clothing, or their cell phone).
When they start managing money as a beginner, it’s important that they have their own source of funds to make decisions with. They don’t learn how to drive by watching you; they need to get behind the wheel and take control. The same is true of money. By taking control of their spending choices, they can decide how much to save from paycheques towards future education, a new laptop, the down payment for a car, or the new jeans or shoes they want. This type of planning helps prepare them for financial stability later in life. And while they’ve got your support at home, it’s the perfect time to learn what happens when you spend too much and leave yourself short. Experiences like that early on mean they'll be more motivated to establish and follow a budget when they first experience the demands of the real world on their own.
Considering a child's overall education, there are also a lot of long-term benefits, over and above the money, to having a part-time job. These include:
- Getting hands-on experience dealing with people like a boss or the general public
- Developing interpersonal skills
- Learning about work-related responsibilities and commitments
- Gaining knowledge and skills that can be listed on a resume or scholarship application
Learning Budgeting Is Important for Teens, but So Is School
Budgeting isn’t the only thing that teenagers need to learn. Before encouraging yours to get a job, consider how much time and energy it will take to handle school and work successfully. School is their work right now, so homework, school activities, and studying for tests must come first. Is your child organized? Can they balance competing demands from teachers, friends, and family?
Determine what kind of work arrangement might be suitable with the household schedule, transportation needs, and family expectations. Before handing out resumes, a child needs to agree that school comes first. If they end up rushing through assignments, or not studying enough for tests because of work, it's time to reconsider the work commitment. Part-time employment needs to make sense for a child—and not just for the dollars and cents.
Teach Your Teen to Budget Means You Can Learn Together
Worried you can’t help your teen learn budgeting because you’re not great at budgeting yourself? Many parents understand how to support their teen's formal learning at school. However, not as many know how best to help their teen learn responsible money management. This is where some free education from a non-profit credit counselling organization comes in handy. Professional counsellors are happy to help, and you’re also welcome to include your teenager in the appointment. Another option is to join a free webinar. It’s easy to register and attend, so get started today on improving your and your teen’s personal finance skills!