Encouraging a balanced attitude towards money

Ideally, we want our kids to grow up appreciating the value of money and not spending recklessly. On the other hand, we don’t want them to worry or feel bad about every penny they spend. Having a balanced approach to money is all part of being a balanced human being.

In a fascinating study using the Spendthrift-tightwad Scale, researchers found children as young as five already have emotional reactions to spending and saving which translate into real life behaviour.*

Whichever side they fall on, neither of these attitudes are necessarily ‘bad’, but like we said, it’s all about having a balance - so it doesn’t start to impact their lives. So, if you’re worried that your teens might be leaning too far in one direction, we’ve compiled a few ideas that might help with encouraging a balanced attitude.

For the “Spendthrift

Hopefully your kids aren’t spendthrifts in the true sense of the word - the term is used to describe someone who spends money extravagantly, or even irresponsibly. However, if you are worried that they aren’t as thoughtful as they should be when they spend, these tips could help:

Set goals and help them save

Encouraging your kids to save up is an investment into the experiences they’ll remember - so help them set goals and visualize with a printed picture above a savings jar. You could even set up an incentive scheme where you match what they save (or contribute a smaller amount) to encourage them to hit their targets.

Help them budget

One good way to help kids of any age to practice their budgeting skills is to give them their allowance less regularly. By doing this, you encourage them to plan ahead with their money - if they don’t they’ll learn the hard way how quickly you can run out of money.

Get them involved in planning

Planning an exciting event and totting up the costs is a lot more engaging than going through bills and spreadsheets. Moreover, it enables our kids to understand how much money is being spent on things like holidays, food and drink. It’s a great way to expose your kids to the value of money without preaching to them.

Give them practice with a credit card

As a teenager, it’s not too early for them to get a credit card. Whilst they’re still living at home, they can experiment with relatively small amounts of money. Getting a credit card could show them early on that they shouldn’t spend what they can’t pay back. It’s better that they learn this now rather than years down the line when their spending is likely to be a lot higher.

Or if they’re still too young or don’t feel ready for a credit card, you could act like one - lending them money when they need it, in exchange for a small amount of interest. You might save the interest and pay it back to them in future - but they don’t need to know that!

For the “Tightwad

A tightwad, on the other hand, is usually somebody who refuses to spend money to the extent of seeming cheap or miserly - certainly not something we see in most children! As parents, what should we do to help?

Find out why they’re saving

The first step to combating signs of ‘tightwad syndrome’ is to find out why your kids are becoming a little too obsessed with saving. Ask what they’re saving up for? Of course, if they are able to save up for their goals they deserve to be congratulated! However, once they reach those goals it’s also important to remind them to spend that money.

Suggest a ‘fun’ budget

If your kids seem over-cautious about their spending to the point that they could be missing out, this could be the answer. Encourage them to set aside a certain amount of money every week or month, to be put towards a fun activity with their friends or family. It could be anything - from a trip to the cinema to a concert ticket. Either way, we’re confident that they’ll soon remember how to enjoy spending their money.

Investing

If your teenager really doesn’t want to spend their money anytime soon, encourage them to look at other options like investing. Explain how risk and return works, and how they might lose out by building up cash in the bank (or at home!) due to inflation and low interest rates.

Your teen might be put off the idea of investing, having heard the myths that they’ll lose all their money. Make sure you explain that history shows, stocks and shares perform better than cash over the long run - they’ve provided 5.4% return on investment compared to cash providing just 1.9% per year over the last 50 years.

Money isn’t everything.

But what we do with our cash and how we look after it can still have a pretty big impact on our quality of life. Learning to be responsible with money is a crucial skill and one of the most valuable lessons we can teach our kids.

Hopefully some of these tips can help you encourage your teens to have a more balanced relationship with money – whether they’re spenders or savers!

Further reading

Find more about
Child Trust Funds

Are we ready for a
cashless society?

How to educate your child on
the cost of living