95 per cent of parents say they felt most responsible for shaping the next generation’s perspective on money, yet 68 per cent are reluctant to discuss money with their kids.Source: Survey by the Financial Planning Association of Australia
Do you think your teen is equipped for money management? Parents play a critical role in influencing their children’s financial behaviour. As your children grow up and enter the adult world, teaching them how to better manage money will help equip them (and you) for the journey ahead.
However, feeling responsible doesn’t always translate into taking action. Parents are reluctant to discuss money with their kids because most often they don’t know where to start.
Here are some first steps that you can take to help your teens learn the value of money and manage it better.
Discuss attitudes as well as tactics
Teaching your children to take a measured approach to money is just as important as getting them familiar with the concept of saving – and the younger you can get started, the better.
Many kids want instant gratification. However, once you teach your children about delayed gratification – saving and waiting to get something even better – you will see a shift in how they treat their money.
Saving, spending, and budgeting
In an age of ‘invisible money’ where most financial transactions take place over card or online, making sure your teen views their savings as meaningful, valuable cash.
A great way to encourage teenagers to save and budget are to set up multiple accounts to separate savings between long-term and short-term goals.
For example, you might have one account where you save for a holiday or a car, and another for short-term spending money or buying gifts for others.
Make rewards task-oriented
The average allowance for a 14-to 18-year-olds in Australia currently sits at $17.80 per week according to the survey by the Financial Planning Association of Australia. Not only is this a welcome injection to their bank accounts, but an important opportunity to learn about money.
It’s a good idea to introduce a bit of planning and structure around your children’s allowance. Rather than simply handing over the cash, sit down with your child to discuss their short and long-term savings goals.
Simulating real-life earning, saving and budgeting is a great way forward.
Only pay your kids’ allowance when they have done their set jobs for the week, like washing the car or tidying the house. This way, you introduce the idea of earning money through valuable contributions, rather than simply being handed it on a weekly basis. Importantly, make sure you’re paying your girls the same as your boys; a recent Westpac survey found that girls received 27% less pocket money than boys!
Earning extra cash
The best way for your child to learn about the world of work is to be immersed in it. An after-school or weekend job will not only provide a bit of extra income but some vital lessons about diligence, punctuality, and teamwork. A win-win.
Lead by example
We know that children learn financial lessons from their parents, so make sure you’re setting a good example through your own money management.
You can set a good example by only using credit cards when you can afford to pay them off in full each month, and always having a cash buffer for emergencies so you don’t need credit. Consider only borrowing money to buy assets that increase in value like property and shares, not for cars or holidays.
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