Personal Finance for Teens: Coaching Your Teenager About Money
To say that parenting is the most tedious social demand would be to affirm the truth. Indeed, parents go through a lot of stress and rigors to see to it that their kids become socially responsible, sound and relevant individuals.
Being a parent in the 21st century is particularly demanding in ways the world never imagined. In this article, I would be discussing teens and money management and how to coach your teens about personal finance. Before then, as a parent, you need to understand the peculiarities of your teens, this way you would get a grasp of how to better influence them positively.
What You Must Know About Teens
- They Possess a Greater Presence in Abstract Reality: Teens are more involved in the abstract reality created over social media that they fail to pay attention to actual reality. They fail to understand that the real world demands just more than social media and so they hardly make or connect deeply to flesh and bone conversations. This means, as a parent, to coach them on personal finance, you need to draw them to the relevance and reality of your course and why it is important to them.
- Books are a Problem: Yes! A huge percentage of teens don’t love reading books. This may be challenging if part of your coaching process gears towards reading books. Good news is that you could always bait them into the relevance and importance of reading such books.
- Little or No Will to Learn: Many teens view learning as a waste of time mostly because they heard people never use what they learn in school. Funny enough, schools do not teach personal finance, so you have to let them know that this is more than just school work, it affects them personally, and it’s relevant to their well being.
- Entitlement Mentality: Sadly, many teens are used to getting anything they want, whenever they want it. This is bad on every level as they sooner grow up to realize that you can’t always have it simply because you want it, you have to put in a fight for what you deserve. You need to get your teens to understand this.
- Greater Tendency to Quit: Merely because they couldn’t do it, they give up so easily. You must inculcate the never-give-up spirit in them.
- Pay Greater Attention to Distraction: Teens need to learn the art of feeding their focus and starving their distractions
Now that you know a few of the attributes peculiar to your teens, you could easily break into them by overcoming these obstacles and teaching them that art of personal finance.
What Your Teenager Must Know
On the road to success the elevator is always out of service, but you can always use the stairs. – Zig Ziglar
Your teenager must understand that financial growth is not a natural reality but can only be achieved by diligently following through a set of principles. It may be beneficial to know that many renowned entrepreneurs today began the art of entrepreneurship as teens.
Noteworthy amongst these entrepreneurs are; Warren Buffet (who started selling gum packs at the age of six), Richard Branson (who sold parakeets at age 11), Mark Cuban (who started by selling trash bags at the age of 12) and so many more. Here’s what your teens must know:
- The Art of Saving: A penny saved is greater in value than a penny spent. This applies particularly to teenage years which are characterized by limited or impracticable investment platforms. Let them understand that their pocket monies are not always meant to be spent on frivolities. They must understand that they cannot always have if it if they can’t afford it, but then they can save enough to avoid it. Saving helps them to achieve long-term goals which appear immediately impossible. The practicality in savings is that it teaches your kids to spend money on only valuable things.
- The Art of Budgeting: Teens need to learn the process of appropriating money to specific needs, one at a time. Budgeting help teens avoid impromptu and unplanned expenditures. They need to understand that every amount earned has its prioritized purpose and spending such on frivolities would make them turn into debt lords with no sense of purpose. A practical way of teaching your kids budgeting is assigning them financial responsibilities. This way, they know that when they get their pocket money, specific amounts should be used for certain purposes.
- The Art of Profitable Time Spending: A study shows teens spend an average of eight hours a day on social media. That’s Huge! Perhaps there is no better age range to let kids know that ‘time is money’ than their teenage years. Rather than sitting idle and creating meaningless conversations with abstract people over social media, they could invest their time into money making projects. What’s wrong with summer jobs? What’s wrong with working an hour after classes? There’s absolutely nothing wrong with investing time wisely. This way kids would understand that on the path to success, time is one of their greatest assets, they should never make time turn against them as a liability.
- The Art of Prioritizing: Understanding the role of priorities is centrally fundamental to personal financing. Teens need to have a basic understanding of the difference between wants and needs. While a want constitutes a mere desire, a need is necessary and is a must do. A study shows that teens are generally more want-oriented than need-oriented which is very bad for their financial growth. Your teens need to analyze their demands on a scale of priorities and place greater importance to need before wants.
- The Art of Debt Avoidance: I know you must have heard some great authors like Robert Kiyosaki say that ‘debt is an asset,’ well that is true to the extent that money from debt sources are invested to generate tangible returns. However, you do not want to risk exposing your kids to such teachings as they may not be mentally responsible and grown enough to manage debt. This is why it is safe to teach them to avoid debt opportunities especially with regards to reckless credit card usage. It is unsound and irrational to buy things they can’t afford and they need to know this.
- The Art of Investments: it’s never too early to expose your teens to the world of investment. They need to start making financial decisions that generate more money for them. Teach them the difference between assets and liabilities and why they need to focus more on assets if they want to grow financially. It’s never too early for teens to learn about stocks, bonds, real estate, and many other investment platforms. They need to understand how earnings from investments and other sources could cumulate into compound interests for them. The earlier the investment, the more viable it becomes over time.
In summary, there are no long or short means towards inculcating financial resourcefulness in your teens. It takes commitment and great attention to achieve this course of action. There’s no harm in being practical, assigning task and responsibilities or even exposing them to financial games like monopoly. When we teach our teens about personal finance, our goal is to grow every home into financial positivists. Those are a few tips we could help with; the ball is now in your court.