Put your teen on the right financial track
If there’s one thing all teens know about money, it’s how to spend it. But beyond that, many teens are lacking in the basic skills needed to keep their bank accounts healthy. Here are seven ways to teach your teens the financial skills they’ll need to survive as adults:
Say ‘no’
There’s a reason there are joke t-shirts bearing slogans like ‘Bank of Dad’: parents are often viewed as an endless source of money by teens. The first step to leading your teens towards fiscal responsibility? Close the bank. If you kids run out of money, don’t rescue them; they need to learn the hard way, before they have a mortgage and kids of their own, how to spend responsibly.
Having said that, there is nothing wrong with funding things like athletic, artistic or scholastic pursuits that a teen would never be able to afford on their own. Just make sure there is financial input from your teen: You pay for lessons, for example, while he maintains his own equipment. Or you agree to match the amount of money she saves for university. Which leads to…
Get a job
The easiest way to teach teens the value of money is to help them earn their own. Getting a job is a rite of passage for teenagers, and while the minimum age for employment varies from province to province as well as by type of work, a 16-year-old should have no trouble getting a job in retail or at a restaurant. The bonus benefit: Working menial jobs will generally encourage teens to stay in school.
When presented with a paycheque, some teens may have problems connecting the amount of money they earned with the time it took to earn it. Squash overspending by pointing out that each hour your son worked only earned him $9; if he blows his $200 paycheque on a gaming console, it cost him 20 hours of his time to pay for it. Once teens internalize this connection, they’ll be less likely to spend every penny they earn.
Get a bank account
When a teen gets a job, a teen needs a bank account. Learning the basics of banking is crucial to having a healthy account later in life.
Go with your teen to set up a bank account, and provide guidance on the right account. Make sure the following is clear:
- banking fees, especially if the debit card is a first
- the dangers of identity theft from debit cards and automated banking
It is also a good idea to put caps on how much money can be withdrawn daily, weekly and monthly, to train your teen to budget his spending.
