Finance Lessons for Your Teen
If you’ve had to reconsider or drastically change your spending and saving habits because of the current economic environment, you’re not alone. But there may be an opportunity in this current market to teach good financial habits to your teenagers; ones that they can carry into adulthood. Just as our parents and grandparents developed their own deeply ingrained attitudes about finances, our teens can share the lessons we’ve learned through these recent times.
For many teens, money is seen as a means to an end. What money can provide— entertainment, clothes, food, etc.— is their payoff. If your family is cutting back, it may be a good chance to turn your teen’s motivators into lessons about personal financial management.
Get Them On Board
Teens are a part of your family’s financial picture, so it’s important to keep them informed on your family’s financial goals (especially if they directly impact your teen), the current situation, if things have changed and why, and their role in the financial plan. Be clear that this doesn’t mean that what they enjoy will suddenly stop; rather, they should aim to be more accountable for their expenses and work to build an appreciation for financial management.
- Help them set their own goals and priorities. Work together to determine their needs and wants, and create a plan to pursue what’s most important. It may be a good time to start a system for financial record keeping, whether that’s through apps, a journal, or a combination.
- Ask them to develop a budget based on their needs and goals. If your teen is looking at a bigger goal like buying a car or financing a trip, saving for their future needs should be a part of their budget. Both the expenditure and revenue sides of their budget should be discussed so everyone is on the same page.
- Get them to want to save. This can take time, but if they understand that their needs and wants will be financed from their savings, they will start to see the value in it. You may want to try further incentivizing them by “matching” their savings or making contributions to their larger goals.
- Show them the potential their savings could have. There are several calculators online that give a rough estimate of how their savings may grow over time. While the results are not exact and are only for illustrative purposes, they could be motivating.
Teenagers are adults in training, and if given enough opportunities, will become more responsible and may even enjoy smart financial management. While they can be motivated by their own wants and needs, if they understand the vital role they play in your family’s financial picture, they may even exceed your expectations.
This material has been prepared by a third party that is unaffiliated with Townsend Asset Management Corp. and is provided for informational purposes only. Townsend considers this third-party source and information to be reliable, but its accuracy and completeness cannot be guaranteed. It may not represent the views of Townsend or its affiliates. It should not be considered a recommendation to purchase or sell any particular security. Past performance should not be relied on as an indicator of future results. All investing assumes a certain degree of risk, including loss of principal. Townsend has obtained permission to distribute this material. Townsend Asset Management Corp. is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm can be found in its Form ADV Part 2, which is available upon request. TAM-22-56