Financial literacy plays such a crucial role in one’s life. Knowing how to manage personal finances and make money-related decisions can truly change one’s life. Of course, those lessons are not only about being financially stable and satisfied. Knowing how to deal with money can help avoid many mistakes and stresses in life, improve the quality of living, and enhance one’s confidence in the financial sector.
Unfortunately, though, we don’t teach teenagers enough about money. In fact, some teens grow up knowing little to nothing about financial management at all. Of course, such an approach is a big mistake. Young people don’t have to learn from their mistakes. Also, they shouldn’t be afraid to work with money or take on financial responsibilities. Money is a big part of our lives, so knowing a way around it will give teens a great advantage.
So, here are several lessons and tips on how to teach teenagers financial literacy.
Differentiating needs and wants
There is a huge difference between something that one wants and one needs. Your child needs to understand that difference as soon as possible. Wanting something doesn’t always have to result in getting it. Our wants should always come secondary to our needs, financially speaking. Of course, it doesn’t mean that a teenager has to learn to deny themselves simple pleasures. Yet, they should master differentiating what they actually need when it comes to expenses.
To learn this lesson start small. For instance, show a monthly budget and let your kids decide where their needs and wants are. Thus, bills, rent, food, insurance, and such will be clear ‘needs,’ whereas entertainment, new clothes, takeouts, and similar will be the ‘wants.’ In addition, there is a distinction between needing a smartphone and wanting the last iPhone model. Such differences are less obvious and require some practice, too.
By the way, such a lesson can go deeper than finances. It’s also a beneficial philosophical approach to life. However, learning such a lesson with money should be the first step in mastering it.
Learning to count the expenses
Children may think that money just comes and goes and that’s that. Of course, the reality is much more complex. So, to help them feel real-life financial responsibility, ask them to keep track of their monthly or weekly expenses. They will have to write down where they spend money, how much, and how often. Such an exercise will help them see how easily money goes.
Such practice will also help you and your child understand where their money disappears and how it can be helped. Thus, you can analyze these expenses and help your child build healthier spending habits. You can start small by showing where they can save a bit. Perhaps, promise to double their saved allowance if they achieve a monthly money goal. Otherwise, you may promise to treat them with a nice day off by ordering their homework at writepaperfor.me as a reward and taking your child somewhere they like.
Encourage taking gigs or part-time employment
Of course, eventually, there is no better way to teach teens about money than to encourage them to take part-time jobs. Earning money will be the most valuable and sufficient lesson on the meaning of money. Sure, such a lesson is appropriate only when your child reaches a certain age and is willing to try working. Also, it shouldn’t interfere with school or their other responsibilities.
Still, work will help young people appreciate the financial stability you provide for them, the value of money, and how hard they can be received. Just having a job won’t teach a teenager to be smart about financial decisions; make no mistake about that. However, it is a solid step toward their financial independence.
Understanding the value of saving
All young people live in the present. Things beyond now and here don’t really exist to them. So it’s normal for their age to think little about the future and possible worries that will come along. For now, your children rely on you to comfort them and save them from trouble. However, it won’t always be this way, so you better have them ready.
That’s where the lesson on saving comes into play. Teach your children the importance of always having some extra money in a savings account. Explain how the world is a chaotic place where emergencies or unplanned needs may come at any moment. A savings account with a reasonable amount of money should help them get through the turbulent time with little stress, discomfort, or despair.
Beyond the value of an emergency saving account, teach them to set saving goals. Hence, explain how one should save money to afford luxuries, vacations, better gadgets, etc. Help them create their first savings plan, where they learn how much time one needs to save a certain amount of money for a specific goal. Such lessons, when practiced regularly, will teach young people to be wiser and more careful with money in the future.
Learning about money can be such an important step during early adolescence. Teenagers and young adults will soon navigate the financial world all on their own. You want them to be ready for such responsibility and approach every financial decision with skills and confidence.