Every parent wants their kids to become financially independent, yet it’s easy to forget being smart with money isn’t taught at school. Without basic knowledge of earning, spending, saving and how to live modestly it can be easy to make bad financial decisions, especially when teens start having their own financial freedom. That’s why it’s crucial to teach your kids the importance of financial independence from a young age as it can give them a head start. Here’s how you can start empowering your teens to be responsible with their finances and provide them with a realistic understanding of developing smart money habits for the future.
Discuss Spending Habits
Helping your teen understand financial accountability is probably one of the most beneficial lessons for them to learn. For example, if your teen decides to spend all their money in an irresponsible way, as parents it’s important to help them realise the effects of spending carelessly. Start by helping them understand the concept of needing something and wanting it, as this will help them make smarter decisions in the future. Chat with them about how you question whether items are necessary or just nice to have, and how sometimes you have to make some sacrifices to stay within your budget. The more familiar they are with the difference between wanting and needing, the better they’ll be at judging what they can live without. Just remember, it’s better for teens to make these mistakes at a younger age with smaller amounts of money rather than later in life when there’s real adult responsibilities.
Set Savings Goals
One of the best ways to learn how to handle finances is through financial goal setting. Parents can help teens set realistic savings goals, such as saving up for a new gadget or a new pair of trainers. It can be empowering for teens to have a plan they’re actively working towards and be exciting when they realise how much they can save when they sit and work it out! Financial goals also provide valuable lessons about the benefits of saving, planning, and most importantly - patience.
Encourage a Part-Time Job
A part-time job is a great way for teens to start thinking about their finances. As well as teaching them the real value of money through experience, it also shows them just how long it takes to earn a certain amount of money. Even better, it will help them learn to take responsibility and give them a whole new sense of independence as they’ll be earning their own money!
Involve Your Teens
Involving your kids in your own financial decisions will help them understand how to be financially independent in real life. For example, if you’re planning on making a big purchase, show them how you research, compare products and prices so you can make an informed final choice. This will also help them learn that being impulsive when spending money isn’t a good idea, and weighing up all the available options is the best course of action.
Give our podcast episode a listen for even more information about empowering your teen to be financially independent.