Teaching a Teenager to Handle Money: 5 Tips for Parents

The sooner a teenager starts planning purchases based on their income, the easier it will be for them to manage their finances in the future and the more conscious they will be about money. The ability to set goals and draw up a budget will allow him to more confidently and freely build his life. What are the best steps to start with?

1. Plan a budget with your teenager

The basis for teaching a child to spend is pocket money. A teenager must have personal funds that he regularly receives from his parents.

It is best to allocate money to him once or twice a month, depending on the days your salary is paid: this way you can plan not only the child’s budget, but also your own. Keep in mind that pocket money is not a means of rewarding or punishing grades and behavior.

The 50/20/30 method can be used as a basis for budget planning. This popular technique was invented by LearnVest founder Alexa von Tobel when she realized that too many people in America live paycheck to paycheck. The rules are to divide the entire budget into three parts:

• 1st category – 50%. These are the basic needs, on which 50% of all income is spent: housing and communal services, the Internet, mobile communications, clothing and footwear, transport costs. But you should not immediately place the responsibility on the child for paying for mobile communications and transport, try starting with the cost of lunch in the school cafeteria.
• 2nd category – 20% to be invested in the future. This is the most important part that should go towards savings or paying off debt. It is best to automate this process: after receiving the money, transfer the amount to a separate account. You can help your teen set a goal, such as getting a new phone or a bike for the school year.
• 3rd category – 30%. It includes entertainment. This includes meeting friends in a cafe, shopping, buying games, etc.

2. Teach your teen how to spend

Try to track how much money you spend on impulsive purchases instead of buying something substantial, how often you buy products “with a margin”, which then spoil and go to waste. Do not be afraid to tell your child about it, look together at what kind of things and products were bought thoughtlessly, and calculate how much money you spent on them.

For example, you bought yourself another pair of jeans when you already have five in your wardrobe and they are still hanging in your closet with a tag, or you bought five yogurts from the store that expire in three days and had to throw them away. . Such an analysis will help determine which items of expenditure spend most of the money.

At the same time, keeping track of the budget is a habit for which you need a tool. The most convenient option is a mobile application where you can see your spending by the end of the month. Going there before each purchase will quickly get boring, so you need to make it a rule to open it once a week for control, for example.

3. Teach your teenager how to set goals

Help the teenager instead of the abstract goal “I want to save a lot of money in six months” to set a specific task: “to set aside 50 thousand rubles to buy a set-top box.” Next, calculate the budget and determine the amount of time it will take to implement it.

Do not forget that you need to put in funds for the purchase with a small margin, as products and things tend to rise in price. If you are going to make a major purchase in the near future, such as a car or real estate, then involve the child in the process.

Show him by example that setting a goal of “buying a car for 1,5 million” with a conditional wage of 80 thousand is pointless. It is more expedient to focus on a cheaper segment and predict price growth in the market.

If the funds are still not enough, then you can take a loan – this is a normal practice. The main thing is to calculate your budget and not overdue payments.

4. Support your teenager in finding a part-time job

According to our legislation, young people who have reached the age of 16, and in some cases those who have not reached the specified age, have the right to enter into labor relations (part 3 of article 20 of the Labor Code of the Russian Federation). Help your child find a job.

If he is interested in something: for example, he takes programming courses, attends art school, is interested in photography / video shooting and editing, tell him about special sites where you can complete tasks for money.

The job will teach a teenager to be conscious about money, set goals and plan purchases based on their income. This does not mean that you should stop paying for transport and school lunches for your child: you should not place such a responsibility on him.

But to show that you can earn money for real goals, like new sneakers or headphones, will be useful. In addition, children are more careful about things that they spent their own earned money on.

5. Trust your teen with a hefty amount of money.

Let your child plan their own budget for a party with friends, such as their birthday at an amusement park.

Turn planning into an exciting activity: offer to draw up cost items, determine an approximate budget per person, calculate the average cost of attractions and a check in a cafe, lay 10% for unforeseen expenses.

Give the amount received to the teenager on hand. So he will feel not only responsible for his event, but also that you trust him. If after celebrating his birthday he still has funds, then do not ask to return them back, but offer, for example, to put them in a savings account.