Teaching Money Management

You don’t need to be an expert regarding how to teach teens about money. Just start a conversation about money when the opportunity comes up at home or when you’re out. Your kids will naturally ask you for the things they want. It’s hard when you have to say no. Talk about how we all have limited money and we need to carefully decide what we spend it on.

Talk about how you earn the money you have to spend. You get a certain amount of money each time you get paid. The money you earn has to cover the essentials, like food, clothes and housing. Use everyday situations to teach your kids about money, including where it comes from and where it goes. Explain that when you tap your card, it talks to your bank who has your money in your bank account.

When you tap to pay it uses money that you’ve made by working and saving. Each time you tap and pay, you have less money in your account. Pocket money can help children to understand the value of money. You can choose to pay them for certain tasks.When your child wants to spend money on an impulse purchase, remind them about the goal they are saving for. Work out how much longer they’ll have to wait to reach their goal if they decide to spend today.

Once your child can grasp the idea of spending and saving money, and they’ve begun to manage a little bit of their own money (either through allowance or extra jobs around the house), you can begin to introduce the idea of borrowing money. By teaching your kids foundational principles of spending and saving at an early age, you can help them form positive financial habits that will last their entire lives.

Part of putting kids in control of their own money is letting them learn from their errors. It’s tempting to step in and steer kids away from a potentially costly mistake, but it may be better to use that mistake as a teachable moment. That way they’ll know in the future what not to do with their cash.