An Experienced View on Teaching Finances to Your Teen
Growing up I was never blessed with the latest fashion trends in shoes or clothing. The highest priced and most trendy clothes or shoes I owned, and wore, had been purchased from our neighborhood K-Mart. I remember boasting to my friends in grade 6 about my 'Pro-wing' shoes when everyone had parents that bought Nike or Reebok. For those of you who do not know what 'Pro-wings' were; they had a symbol like Nike but upside-down.
Most of my clothing had been hand-me-downs bought from second had stores. To this day I remain budget conscious and prefer to buy most of my clothing from stores like Goodwill, Salvation Army, St. Vincent dePauls, and much recently Platos Closet rather than shopping at the mall. By the way; Platos Closet has up to date trendy clothing that is second hand, and because the owners screen the clothing they purchase very carefully, you will rarely if ever find clothing that has a tear or is worn out.
Knowing what I know now, you can't help but wonder if my budget tight beginnings as a child had somehow influenced my financial thinking as I grew into an adult. Was this type of upbringing more detrimental or beneficial?
Money Money Money
Shopping? Me? With what money?
As a teenage I was the 'Oddball out' because unlike other teenagers my age, I didn't get excited about shopping for the latest fashions or hanging out at the Mall for hours on shopping sprees.It just wasn't "My Thing."
In reality I knew that the truth of the matter was because I wouldn't ask my parents for money. Call me hardheaded, but I knew how hard both my parents worked, and I was the oldest child. I had a certain level of responsibility. So I did what any logical person would do....
I got a JOB....
I worked in my high school cafeteria before school, on my breaks, and on my lunch break. I was allotted with 10-15 minutes to grab food of my choosing, (Free food!) but ultimately this had put a severe dent in my social life. However, when I received my first real paycheck my thoughts were confirmed that my social life was a small price to pay for a nice little paycheck that I could spend any way I chose. To top it off I was even receiving extra credit from my school for having a job!
The Bargain Shopper
Managing a Budget
Now that I was making my own money I didn't want to part with it so easily. So I searched for bargains, clipped coupons, and only bought clothing that was on sale. I managed to save enough money for a down payment on my first car (An Evergreen 1996 Ford Explorer) at age 18. I also applied for and received my first credit card. That's where I hit a bump in the road. Credit cards didn't have a tangible limit to me at the time. I began buying items I couldn't afford only to get behind on payments and had to 'rob Peter to pay Paul'. I believe if I had a little more guidance and advice from my parents at the time I wouldn't have made that mistake. (They had financial troubles of their own) I remember thinking "There are fees that are separate from the money you borrow?! What?! Really?
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So Who Am I to Give Financial Advice?
Okay, fast forward to today after trial and error with credit cards, personal loans, and payday loans. I can safely say that I have tested and stretched my financial budget to its limits. I've been dragged through the mudd and cleaned myself off only to be run over by the prolifically sound fees and repercussions. I chose to work at a young age, moved across the States and back, drudged through a divorce and remarried. I have two children, a boy and a girl; one a toddler and the other is nine years old. I am the oldest child of six children and believe now I can pass on a grain of financial wisdom through my experiences.
When Parents do NOT teach Financial Advice or about Responsibility
I know a set of parents that have two children; one is in college and the other is in high school. These parents pay for their older child's vehicle expenses and both children sport brand name shoes called 'Jordan's.' These shoes price upwards in the hundred to three hundred dollar margin. This is a lifestyle that is not being supported by rich parents, but rather two very hard working parents that both have two jobs, are renting their home, and have no savings for retirement. Both parents are in the age range of 56-59. Ages 62-65 is supposed to be the retirement age people! Where is their funding for their retirement? Going to their children..
Now I will ask you one question: Do you want this to be you? I thought not.
Teaching Your Children About Finances
What is your approach to teaching your teen about finances?
Time is Running Out for YOUR financial Future
Tips on Teaching Your Teen Financial Responsibility
Here are some guidelines to help you prevent the previously mentioned future:
- Give your Children Responsibilities (Chores, and completing homework)
(Make sure to set goals for them and reward them when they are met)
- Teach your Children the Value of money
- Supply a monthly allowance that is earned through accomplished tasks (chores etc)
- If your Child uses up their allowance but wants to make a purchase let them borrow the money; which will be deducted from the next month's allowance. This will teach them to be more conscience about their spending.
- Set and Apply Rules of Expectation
- Be available to answer any questions they may have (make time for them)
- Encourage them to work a part-time job (Finances become a reality when it is money YOU earn)
- If they want to purchase a vehicle, encourage them to save up for a down payment. (This will give them a tangible goal) You can meet them halfway by either co-signing their title or offering to match their down payment.
Be aware that if you choose to co-sign their purchase document that you will be financially responsible if they do not already have a job. It is a much better option to encourage a purchase of a used vehicle that is reasonably priced.
- Lastly..it is okay to buy a name brand item Occasionally as a special gift or treat
Do NOT however, use this as the basis for their everyday fashion attire as this becomes expensive and will set them up for either A) Give them the idea that you will continue to foot their bills or B) Set them up for future financial distress as they attempt to continue their upper scale purchase..thereby beginning a cycle of...BEING IN DEBT.