When it comes to parenting, there are certain things that people stress about teaching their children: potty training; riding bikes; long division and fractions; driving; and money! Once your children enter into high school, it’s time to have some serious lessons with them about all aspects of money. It can be a daunting task to adults because, let’s face it, just because we are adults doesn’t mean we have it all together in this department. Our hope as parents is that each generation will do better than the last. So, let’s start preparing the next generation to be smart with their money by sharing some of these tips and guiding them in the right direction – who knows, some of it just might stick!
It’s all about the budget.
Does your tween or teen get money as gifts or an allowance and want to blow it all on the latest craze or on a night out with friends? Teach them how to create a budget now so that they can continue to live within their means in the future. They’ll be adults and out of the house in the blink of an eye so set them up for success now. Have a meeting with your kid and show them how to create a budget that they can live within. The important thing here is to keep in mind you are here to guide them and introduce them to living on a budget, you are not here to create it for them. It’s very important that they be able to see the process and understand the reasoning behind allocating funds in certain categories. Ask them to jot down their expenses so they can see in black and white where their money is going. Teach them that they have a certain amount that gets rationed out for bills and other monthly expenses. Then you can help them set aside a certain amount in savings and then break down the rest into fun things they wish to do, like go to the movies, the mall, get their nails done, etc.
Has your teen had their eye on a big-ticket item? Often at this age, they dream of having their own car or the latest video game system. Those are both big expenses in their own right. Instead of you shelling out your hard-earned cash for those items, encourage your teen to set a savings goal and budget accordingly. They will need to determine how quickly they want to reach their goal and then figure out how much they should save each week to do so. This can be a hard thing for teens but with if they are in the right mindset, they will do it.
Explain the dangers of borrowing money.
Whether your teen just turned 18 and wants to apply for their own credit card or if your teen is asking to borrow money from you to buy something they have their heart set on, this is the perfect time to talk about the dangers of borrowing money. It might be nice to get their hands on something they desire right away thanks to a credit card but explain how much that item would cost by the time they paid back their debt. It’s easy to have that short-lived happiness cause years of financial stress and strain. The same goes for borrowing money from a loved one – don’t do it! The weight on your shoulders of having the pay them back can quickly make seeing this person a nightmare. Your teen may feel guilt, shame, and/or be embarrassed that they had to borrow money in the first place. They also may avoid seeing the person they borrowed from if they are taking longer to pay back the loan than they anticipated. Lastly, the relationship may be permanently damaged if they fail to pay back the full amount because the person who loaned the money may feel taken advantage of. It is simply a lose-lose situation and is best to be avoided.
Responsibly handling money will get your child very far in life (and will keep them from returning to the nest!). Money can be a delicate, personal subject but it’s better to set them up and get them going in the right direction now versus when they are just starting to get their hands on money versus when they are middle-aged and are caught in a pickle. Handling money responsibly translates into being responsible in other areas of their life. Start young and you won’t regret it!
As a student at My Virtual Academy, your child will learn skills that they will use their entire life, just like the financial lessons you will be teaching them. A strong education, from both school and home, will set your child up for success during their school years and beyond. If your son or daughter is in grades 5-12 and would benefit from learning at their own pace and in their own home, please give one of our Enrollment Specialists a call at 800-297-2119 or visit our website today to get more information. We hope to hear from you soon!