As a parent, you probably have, or will, experience teenage tantrums. These are often related to money, with many youngsters not understanding why we can’t always give them what they want. They struggle to comprehend how to spend money wisely, which is concerning as they will soon be adults. That is why it is essential to talk to and educate them about money matters.
“One of the most important things parents need to do is to look out for and identify opportunities to teach their children about money.” This is according to Elsie Govender, CSI Manager at Metropolitan, which has been delivering the Kickstarz financial education programme to schools around the country.
She shares some of the ways that parents can teach teens financial lessons in their everyday lives:
An allowance AND an education
Before giving your children their allowance, make sure that you sit them down and get them to write up a budget for how they plan to use the money. For instance, with a monthly allowance of R500, they can spend R100 at the tuck shop, put R150 towards entertainment like movies or sporting events and allocate a portion, maybe R150 to buying a friend’s birthday present, eating out or airtime. You should also get them to set aside the balance of their pocket money –in this instance R100 – aside for something that they want in the long-term such as a new cell phone or a more expensive item of clothing. This money should be saved somewhere that is not easily accessible, like a basic savings account.
If their needs exceed what they have budgeted for, they might have to cut back on some of the entertainment items, revisit the list again and only purchase the things they can afford. The lesson taught: only spend within your means. This not only applies to our children, but us adults too.
Involvement in family money discussions
Let’s say you want to buy a new fridge. Explain to your kids what kind of fridge you want to buy and how much it will cost. Then, do an exercise with them to show them how much you will need to save each month in order to be able to buy it with cash. Next, do another exercise showing what it would cost should you decide to buy it on credit. The lesson taught: if you want something, but don’t have enough money for it right now, you will need to save towards it. They will also learn that buying on credit ends up being very expensive.
Investing in the future
Getting a part-time job can provide teens with the opportunity to learn about more advanced money management methods. This can be done by helping them to set financial goals for the future and teaching them about investing some of the income they earn to achieve these goals. The lesson taught: investing can help make your goals reality.