Do conversations with your teenagers about money begin and end with "How much do you need?” Then stop right there. If you want your teens to learn how to manage money successfully, show them how it’s done.
Being a good financial role model may prove challenging to some. According to a Debt.com poll of 1,000 American, 92% believe everyone needs a budget, but only 70% said they were using one. Many who do budget admit to slipping during holidays or on special occasions, sometimes undoing all their careful work during the year.
But don’t give up hope. You can still teach your teens how to manage their finances and brush up on a few skills yourself. Here are a few activities you can do with your teens that can help both of you:
- Check impulse buying. If your teen wants something expensive, have him or her wait 24 hours before buying it. If the item isn’t as important to them by that time, then the money can be better spent elsewhere.
- Comparison shop. Ask your teen to research the item with you to find the right one at the best price.
- Show them how to create a budget. Debt.com has good instructions their website. There are some free budgeting apps you can use as well.
- Compare credit card offers. Review with your teens several online offers or those you get in the mail so they can evaluate different interest rates and fees.
- Warn them about the minimum payment trap. Choose a desired item that costs, say, $1,000 and use an online credit card repayment calculator to show how long it would take, and how much extra they'd pay in interest, if they pay only the minimum due each month. Or show them the table on your credit card statement that shows the cost of only making minimum payments.
- Brace them for college sticker shock. Rather than telling your teens to save for college, show them why they should save. Have them choose three schools they're considering, then have them check the net price calculator required on all college and university websites. Discuss how financial aid, scholarships, and grants reduce the sticker price.
Finally, know that the real world is a far better teacher than a high school math assignment. Make your teens responsible for personal items, such as new clothing, hair and face products, and snacks. This teaches them how to search for bargains to stretch their dollars.