They say money makes the world go round and while being rich isn’t the be all and end all, knowing how to manage the finances you have is of paramount importance. In fact, it’s one of the main duties most adults have, so here’s why it’s beneficial to teach teenagers about money management from an early age.
1. They’ll learn to read the small print
These days, it’s relatively easy to get a loan without significant proof that you can pay the money back on time. While sites like CCP offer an ethical service providing hassle-free lump sums to those who need to raise extra finances, other companies are both opportunistic and cunning using extortionate interest rates, high fees and unscrupulous tactics for dealing with late repayments.
For this reason, it’s crucial to teach teenagers to live within their means and not to borrow unless they have a very good reason to. You should also explain that if they do need to approach a lender that they must research the offer thoroughly, read the small print and always make sure they have a plan in place to pay the money back within a set time frame.
2. They’ll learn the value of money and how to budget
Teenagers are notoriously expensive, but so that youngsters don’t think that money grows on trees and that The Bank of Mum and Dad is always open, it’s a good idea to give them an allowance – or, to make them do chores in return for payment. Not only will this teach them the value of money (in other words, you don’t often get something for nothing in this life), but it’ll also help them to understand all about budgeting. If they know money won’t be handed out to them easily whenever they come running, they’ll think more carefully about what they want to buy and when.
Similarly, teenagers who are given a set amount each money, or are paid in cash for jobs that they’ve done, will also be encouraged to make their funds last until they receive their next allowance instalment – or to do more jobs around the house to increase their earnings.
Of course, teenagers can be stroppy and all of your money management lessons might go in one ear and out the other, but you can always attempt to introduce budgeting apps in a bid to make the whole process a bit more modern and fun.
3. Teenagers will learn how to save
Putting money aside for a rainy day is extremely important as you never know what might crop up along the line – be it unforeseen car repairs or a high electricity bill. You might even need to travel at short notice which can’t be done if you’ve no extra funds, so it’s wise to teach teenagers about saving. Opening their very own trust fund or savings account is one way to encourage them to hold onto their cash and you could even show them the array of money-saving apps available these days which will help them get more for less.
Children are never too young to learn about money management, so try to teach them the basics and give them enough responsibility to put their knowledge to the test. And don’t worry if they make a few mistakes here and there! It’s better for them to do it while they are young and learn from what happened than make costly decisions down the line.
*This is a collaborative post.