I recently had a conversation with a group of teenage girls, and one girl started to talk about how nervous she was about going away to college and having to manage her own money. I asked the first girl what she meant and she said she has absolutely no idea how to budget and is afraid that all the money she earned at her part-time job will not last her through her first semester at college. Everyone in the group agreed with her. None of them know how to keep track of what they are earning or spending. And the reality of not having spending money has become very clear to these girls.
To be honest, I didn’t know how to budget or handle money either at their age. I never had conversations about money or investing with my parents. It wasn’t that they didn’t know, it was just that we didn’t talk about it. I wish my parents taught me at an early age how to budget and to properly invest so I wouldn’t have made the mistakes I made in the past.
Do not assume that your son or daughter is learning about money management and wealth at school. Even if their school offers a financial literacy course, it is fundamental that you reinforce it at home. They must know that it is real and not just theory. We need to have more conversations, not about the lack of money but simple awareness around what we want money to provide for us.
Today, Americans are in more debt than ever before and I believe that it is because of lack of conversation. If you don’t know where to start, and that’s ok, there are so many resources available online, in a quick search you will find plenty of information. On a side note, I am currently listening to the audiobook Unshakable by Tony Robbins to further educate myself on investments and I recommend it.
It is vital that we teach children how to use their money wisely.
First, it is essential that teens understand how to track their accounts online and how interest works. If they don’t have a bank account, take them to a bank and show them how to use the bank in person. At an early age, talk to them about the importance of saving a percentage of whatever they have earned in a savings account and to add to it on a weekly or monthly basis.
Have your son or daughter create a list of things they need and how much it costs. If your teen doesn’t need to buy anything, but uses their money for entertainment, have them make a list of those expenses for the week. It is important that you review with them over a week (or two) what and where they are spending their money, and help them make any necessary changes.
Show them how to keep a monthly budget and the importance of not passing their limit and the consequences. Many teenagers who use debit cards are not aware at all of what they are spending and if that is the case you might want them to use cash only. Either way, the key is in having the conversations.
Having these conversations will set up your child for success and empower them when they are on their own. Learning to manage personal wealth and having a healthy relationship with money are critical life skills that we should all start teaching children at an early age.
Much love,
Andrea
