Raising teenagers is expensive and their needs are seemingly endless. Cellphones, data, clothing, entertainment and tech gadgets all come with a hefty price tag, and it’s easy to feel that your teenager doesn’t fully appreciate the value of money or how hard you work to earn it.
Getting teenagers to understand the value of money and the need to be financially responsible is not a once-off activity. It is a process, not a single conversation, which involves talking to them in reasonable soundbites as and when teaching moments present themselves.
While imparting these valuable lessons, consider the following:
- Understanding opportunity costs
- Money is earned
- Instagram is not real life
- Money is tangible
- Conscious consumerism is a thing
- Life lessons in saving
- Living with consequences
- Careers and money
- A lesson in debt
- Personal money management starts at home
Building wealth involves making informed and well thought out money decisions. When it comes to making purchasing decisions, allow your teenager to consider the opportunity cost of buying something that she really wants. For instance, she can either buy a new pair of Beats earphones or take a group of friends to the movies, but she can’t have both. Giving your teenager an opportunity to choose between a material thing and an experience is a great way to reinforce this lesson, while at the same time highlighting the benefits of investing in experiences rather than material objects.
Allowances are a great way to teach your teenager money management skills but avoid paying your teenager just for breathing. In the real world, money is earned, not given – and it is important that your teenager establishes a link between effort and reward. Paying an allowance for doing nothing is much like earning a participation trophy. Give your teenager opportunities to work for money, and don’t be afraid to include commission or bonuses if they go the extra mile or do a job particularly well.
The pressure placed on our teenagers by Instagram influencers and big brands is enormous, and it is unrealistic for any teenager to be able to compete against the misleading messages of social media. Social media can drive teenagers to constantly compare themselves to others causing feelings of inferiority, self-doubt and shame. Social media makes it challenging to teach your teenager to be content with what he has, and that self-worth and net worth are in no way connected. The best way to teach contentment is to model it yourself by ‘walking the talk’. Work hard and surround yourself with role models for your children. Be intentionally vocal in front of your teenager about people you admire because of their intellect, hard work, tenacity or philanthropic work.
Our move towards a cashless society means our teenagers have fewer interactions with real money. Snapscan, card tapping and online purchasing mean that physical exchanges of cash for goods are few and far between. This lack of physical presence can also create an emotional disconnect when it comes to money, and it is our job to help our teenagers appreciate that money is a real, tangible thing. A great way to keep your teenager connected with money is to give them cash and send them grocery shopping. Allow them to draw up a shopping list, check the prices of the various food items, count the money, and hand over money in exchange for groceries.
Our teenagers are very environmentally aware which makes teaching conscious consumerism so much easier. Besides teaching price consciousness, talk to your teenager about making positive decisions when shopping – taking into account environmental, economic and social considerations. Seemingly small decisions such as not purchasing plastic, choosing to support local businesses, and intentionally buying recycled goods make a huge impact. A fabulous resource that deals with over-consumption, its impact on the world and how we can combat it is storyofstuff.org.
Every teenager yearns for something they cannot afford. Encourage your teenager to save for something they really want but cannot afford. This allows them to have dreams and desires that motivate them to work, save and delay gratification. You can encourage their savings journey by committing to matching whatever amount they manage to save.
Money mistakes are cheaper when you’re younger, so let your teenager make a few bad money decisions – and then let her live with the consequences. It is only through decision-making and seeing the outcomes of those decisions that we learn, grow and change our behaviour, so don’t be tempted to come to the rescue too quickly. Step aside, remove the safety nets and allow your teenager room to make her own mistakes while the stakes are still relatively low.
Don’t dissuade your teenager from pursuing a career on the basis that the ‘money isn’t good’ as this undermines the importance of other factors that should be considered such as job satisfaction, the fulfilment of purpose, one’s impact on society and the environment, or a particular calling that your teenager might have. In addition, the rate at which industries are being disrupted is unprecedented, and the earning potential of a particular career today is no indicator of its earning potential tomorrow.
Let your teenager know what it feels like to borrow money and be indebted to someone else. If they want to buy something they cannot afford, act as their banker and lend them money on pre-agreed repayment terms. Hold them to the terms of their repayment and charge interest, even if it’s nominal, so they can appreciate the effects of compounding interest working against them.
Teaching financial responsibility is one of the most important gifts you can give your teenager. Teach them how to read a payslip, show them how much tax you pay, let them appreciate what medical aid costs, let them read through the household budget. Make them responsible for their own bank account, encourage them to track expenses and praise them for making wise money choices. As they get older, give them a clothing and entertainment allowance to increase their scope of financial responsibility.