Monday, June 21, 2010

Money And Teenagers

It goes without saying these days that a teenager and their money are soon parted. Now it’s easy for us to sit back with our wealth of experience and see the mistakes our teens are making as they squander their first hard earned pay checks but we have to remember that our experience came from, well, experience. And as hard as it is to do, we have to allow our teens to learn their way through the financial world, making mistakes in the process and, hopefully, learning from them. Careless spending is understandable after all. So many years of living off handouts from parents provide teens with the motivation to spend their money as fast as they earn it as a way to demonstrate their independence and freedom.

This is part of the learning process for young adults and we shouldn’t pressure them too much to save and think for the future. Rather, a bit of guidance should do the trick. Encouraging them to save up for a big ticket item is a great way to teach the benefits of delayed gratification and they’ll learn how to set aside some of their earnings along the way. Patience is the essential virtue your teens need to learn when it comes to money and it is something in very short supply in young people. The sooner they learn that the things worth having are worth waiting for, they will have taken a big step towards full maturity. In fact, you might want to take it a step further, convincing them to set aside a small portion of their pay without any specific pending purchase in mind as a great way to teach them how vital it is to save. We use the euphemism ‘Rainy Day Fund’ and it can mean vastly different things at different times in your life from getting that new iPhone when we’re young to meeting mortgage payments after we’ve been laid off. The bottom line here is that your teen learns to save. 
Another important thing you can do for teens as they learn about money is to take a step back and let them handle whatever problems they get themselves into moneywise. Stepping in with an open wallet gives your teen this idea of a safety net always there to catch them should they fall. Rather than being a comfort, it can oftentimes be misconstrued as a free pass to spend irresponsibly as there will always be someone to bail them out when the going gets tough. This can lead to a lifetime of bad spending habits and debt. As they grow, children are all about cause and effect and the same goes when it comes to money and finances. We have to let them fall flat on their face if need be so that they can pick themselves up, becoming all the stronger in the process.

In the end it’s about guidance, not leading your teen through the world of finances but, rather, walking beside them as they make the journey and pointing out the pitfalls along the way.

This article written by Andrew Salmon from the life insurance website

1 comment:

  1. Squandering your money can be one of the worst things you can do as a teenager. If parents do their job correctly, they should be able to teach their teens good spending habits.
    This site has some good advice on saving money too.


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