Parents and carers play an important role in shaping their children’s financial behavior and attitude towards money. Many teenagers rely on their mum or dad to set the right example when it comes to managing finances.
Of course it’s not always easy to talk to teenagers about money, particularly as they approach adulthood. Bearing that in mind, we’ve pinpointed three areas where you can help prepare your children’s to navigate the tricky waters of personal finance.
Providing your teenager with a regular, set amount of money and the responsibility of paying for something they want gives them their first opportunity to practice how to stay within a budget.
One way to get teenagers to take responsibility for their money is to give them a set budget for a specific task.
This could mean setting your son or daughter a monthly budget for their lunch.
If they take this money and spend it on clothes, or going out, then they’ll learn a valuable lesson when they find themselves stuck having to bring in sandwiches from home.
Part of teaching your teenagers how to manage their finances comes down to being strict with the money you give them and not bailing them out if they overspend.
Better they learn the hard way now while the amounts are small, rather than later when overspending can lead to problem debt.
Our research has shown that nearly eight in ten 15–17 year olds who cover unexpected mobile phone expenses from their own pocket say they keep track of their income and spending.
Just over half of those who turn to mum and dad to cover unexpected costs claim to keep an eye on their financial incomings and outgoings.
When it comes to managing finances, many teenagers mimic their parents’ behaviour.
So, if you’re the type of person who saves up to buy something, then it’s more likely that your children will do the same.
If, on the other hand, you’re quick to turn to credit to fund non-essential purchases, your children are likely to follow in your footsteps.
One way of setting the right example is by including your teenagers in some of your financial decisions, particularly as they reach their late teens.
This could include showing them how you shopped around for a better deal on your current account, or sitting down with our Budget planner tool to work out a monthly budget.
You can take this a step further and send them out to do some grocery shopping with a list and strict budget.
Just be careful you don’t end up with a kitchen full of sweets and crisps!
It’s also a good idea to be open with your children about some of the financial mistakes you made when you were younger.
Sharing your tales of woe can be a good way to highlight the dangers of poor money management.
Whether this means telling them about the time you couldn’t afford to fix the fridge after it broke down, or how not getting your home insured cost you thousands after a burglary.