Raising a teenager is not a job for sissies. Working out how to strike the fine balance between supporting their needs and teaching them to be self-sufficient is a challenge for even the most thoughtful of parents. And there’s no arena in which this “not quite an adult, no longer a child” mentality plays out more overtly than in their finances. Who pays for what? How much can you expect from them? How can you help them to be responsible while still supporting them? Yes, it’s a minefield, but we have some approaches that we believe might help. Just remember that as with every other aspect of parenting, every child and every family is different so you need to work out what works for you.
It starts with an income
Whether your child has a weekend job or earns their pocket money, it is vital that they get a specific income from somewhere every month because a limited source of funds is the basis of all the subsequent financial lessons. Don’t be tempted to top up their coffers. Teach them to make do with the amount that you have set or that they earn. They can use apps to keep track in a medium that they’re comfortable with.
Depending on your own financial situation and what other teenagers in their school are getting, you can set a weekly or monthly stipend that your child receives. Don’t be influenced by the behaviour of other parents if you feel that they are giving too much money. You’re not doing your teenager any favours by teaching them bad financial habits just because everyone else is doing it.
Also remember that while jobs are fantastic opportunities for children to learn about the value of money, if your child is overloaded at school with academic activities and extra-murals you might be doing them a disservice by insisting that they get a job as well.
Establish the ground rules
You have to work out how and where your child must spend their money. For instance, some parents buy their children clothes, while others include a clothing allowance in their monthly pocket money. Some teenagers have to buy their own toiletries, while others get the basics but have to find the cash for their cosmetics and fragrances. Again, there’s no right or wrong here but making them responsible for a few of their monthly necessities will help to teach them the value of money.
Teach them to budget
The next important financial lesson is to show them how to plan their expenses rather than spending until they have nothing left. Help them to draw up a monthly list of their expenses so that they know where their money is going. This is a very useful way to get them to distinguish between wants and needs – for example, if they have a clothing allowance they might desperately want a pair of Levis, but when they realise that they’ll lose four weeks’ entertainment budget and have no moisturiser for a month, they might reassess their position.
It is vital that one of their budget items should be saving, which we’ll tackle in the next point.
Teach them to save
Help your teenagers to identify savings goals. Whether they want an iPad, a car or an overseas trip when they finish school, help them to work out how much they need to save over what timeframe. Teach them to “pay themselves first”, meaning that their savings should come out of their earnings or pocket money as their first expense rather than their last.
There’s no harm in offering some kind of a saving incentive – for instance that you’ll chip in R500 for every R1 000 that they save. And if they are putting away significant amounts of money for a longer period of time, this is a great opportunity to show them the virtues of investing.
Show them the evils of credit
We’ve all heard the story of the graduate who gets her first credit card and then spends her available balance until there’s nothing left and no way of paying it back. Help your children to avoid the “free money” mentality by teaching them a few hard lessons about credit.
If you’ve already taught them to save rather than borrow when they want something, the battle is halfway won. But if there is a situation in which borrowing from you becomes necessary, be sure to make them pay you back, in a reasonable timeframe. And it doesn’t hurt for you to charge them a little interest and explain how that works – this is a lesson that has to sting a little bit to get across.
Don’t be mean!
While it’s terribly important to teach your teenagers sound financial habits, they are still your children and probably won’t be under your roof for very much longer. There’s no harm in offering support and even the occasional treat to express your parental affection and appreciation for them.
A good way to approach it is not to waver on all the guidelines above – teaching them budgeting and saving and general discipline – but also to give them an occasional unexpected treat. Just be sure that these treats don’t come too often and undermine any lessons you’re teaching about saving.
Financially fit and free
If you apply these approaches consistently and with kindness and only the best intentions your children will be unleashed into the world with a firm grasp on basic financial values. These should help them to be financially secure for the rest of their lives – it really is the biggest favour you can do them.