| Teach Kids Money Management |
| By Credit Federal |
Published
06/19/2009
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Financial Tips
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Teach Kids Money Mangement and Get Teens to Save for College Expenses
It has been said that before a child turns age 17, parents have probably spent well over $100,000. Teens have experienced most of their early life watching parents just spend money. Most every time they want something, we try to buy it for them. They have cell phones at an early age and the designer clothes to go with it.
If you spend money on yourself to keep up with your peers, teens will notice. When everyone in the neighborhood got a new auto and you ran out to get one, your teen probably noticed. If your teen does not see you pay for debts or budget, they can't learn meaningful skills to help them in adult life.
Not only are parents getting into more debt trying to have things their peers have, the kids are trying to keep up with the latest and greatest products. Many households are deeply in debt due to over spending to keep up with peers. Teens usually only see parents spending money and not budgeting money.
Home equity loans are often used to help provide a cushion for spending habits and unexpected expenses. These loans often replace basic budgeting skills and are used for out of control spending habits. Instead of having an emergency savings account, we use home equity lines of credit.
When there is not a college fund or savings fund, it could be time to say "No" to teens and refocus on a budget. First, evaluate why there is a need to constantly spend money on your teen. Consider whether it is because you feel guilty, you want them to keep up with their friends, or you think they will really enjoy what you are spending money on for them.
Begin by letting teens take a part in seeing that when credit cards are used, they must be paid back later with interest. Let them see that there are utility bills, dentist bills, mortgage bills that must be paid each month.
Teach your teen they must work toward goals. Say "no" when your teen constantly wants YOU to buy something that is not needed. Don't reinforce impulsive spending habits. Teens who must save money for something may decide later they really don't want or need it.
Teach your teen to budget money. Give them an allowance to spend. Teach them that if they want to spend it all on one thing, it is gone until the next allowance is given. This teaches them quickly about spending money in haste.
Teach your kids to contribute financially. We usually have a set amount we pay for things. For example, your teen wants the more expensive shoes, let them pay the difference with their money.
Loan your teens money with interest. This can be a great lesson in borrowing. Anytime you loan them money, charge them interest on every dollar. They will soon get the picture that it costs money to borrow money. Go further and increase the interest if they are late repaying the money.
Finally, teach your teen to save a certain percent of every allowance. This can instill life long habits that will go with them into adult life. They will be more prepared to set a budget and start saving money.
Download our free money management software to track expenses.
Review more online tips and advice on how to teach kids money management:
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