Money Management for Children
The majority of teens are unfamiliar with managing money and investing in their future. Many parents think that it is only a parent’s duty to provide for their kids and never have the kids worry about money or even take part in bringing any money in. This idea should be put to rest by responsible parents today.
It is even more important than ever to teach your children about money management techniques that will help them value the money that they will earn.
Parents must provide this financial education, which is not touched on in any great detail in the classroom at school. In order for kids to be ready for the world, they need a money management strategy that will help them understand some of the concepts of sound financial planning.
This doesn’t mean that parents should give their kids an allowance in order to teach them to manage their money. There are other ways. When your kids get an allowance, and they know that they will get it regardless every week, the whole point of managing their money is gone and they won’t treat the money as their own money.
Children are very capable of earning their own money and this will teach them early on how to manage their money. When they earn their own money they will be filled with pride and a sense of accomplishment that cannot be provided by merely handing them money every week.
Your children will have a better appreciation of the money that they themselves earned, and they will automatically manage it better.
For many teens, for example, buying their first car is their first major investment. Only a few understand the true cost of ownership. I remember buying my first car, the actual cost to buy the car was just the beginning.
Most teens don’t even consider expenses such as maintenance, repairs, gas and insurance. No one ever mentions those items, well, maybe they have heard people mention the price of gas.
As a parent you could break down all of the expenses for your teen, from the insurance premium, the road taxes, how much gas you need to go certain places and the cost of general maintenance. I am sure this will make your teen think twice about the car he or she is about to buy, and hopefully appreciate the fact that you have taxied them around all these years.
They need to understand there are many factors to think about when they make a financial decision like buying a car.
With the breakdown of all the expenses you did with him/her, together you can now come up with a plan to manage the money your teen needs to be able to afford the car they desire.
While teens who count on the family gas card don’t give it any thought when it costs $50 to fill up the tank, teens that pay for their own gas are well aware of the price of a gallon or liter, and they will make sure they manage their money in such a way that they can afford to use their car.
This is just one of many examples of how children and teens can learn to manage their own money.
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