Top tips to help your teen understand the value of money

Our attitudes around money are shaped from a very young age. Research suggests that at just nine years old, children are mature enough to understand the concept of saving money.

The good news is; it’s not too late for your teenagers to start becoming expert money managers now. And as a parent, there's plenty you can do to help them.

We’ve come up with some hints and tips which could help you out…

teens-value-of-money

Time to talk

There’s evidence suggesting as parents we have a heavy influence over how our kids learn to behave around money. According to recent research, as teens grow up, 39% of them will use the same bank as their parents. They’re more likely to do this than to support the same football team or vote for the same political party.

Yet, we can be hesitant to talk to our kids about money for a variety of reasons. In some households it’s a taboo subject, and parents don’t know how or when to start the conversation. But avoiding open conversations about finance may just encourage them to put their head in the sand when they need help.

Handy hint: Share stories of your own financial mistakes. It can open up conversations they can relate to without preaching and help them understand the consequences of poor money management. Our kids are growing up in a totally different world to the one we grew up in, and in today’s increasingly cashless economy, it can be harder to appreciate the value of money. So, hearing your stories and experiences will probably help them more than you think.

Managing Allowances

77% of parents choose to give their kids (between the ages of 4 - 14) a regular allowance. According to Rooster Money’s Pocket Money Index, the average allowance received by children between the ages of 4 - 14 is £6.15 per week.

When your kids first started receiving their allowance, they probably spent it on sweets. But once they reach their teens, having an allowance becomes much more of a balancing act. Their priorities change and paying for a mobile phone contract or buying the latest Xbox game presents a more expensive trade-off than confectionery did.

It’s a great way for them to learn about prioritising and budgeting, and they may well make some mistakes along the way. However, it’s much better for them to be experimenting with £20 than with £20,000 later in life.

Handy hint: Why not change their allowance from weekly to monthly? It helps them get into the habit of planning ahead and saving for future expenses, and might encourage them to make their money last longer.

Earning and learning

Remember those days of getting up at the crack of dawn to lug a high-vis bag full of papers around your neighbourhood? And the excitement of getting your first pay slip?

Many teens are foregoing the old Saturday job and instead embracing the gig economy. This freelance work, much like paper rounds and babysitting, is a useful way of learning that time equals money. Once your teenagers have an income, they quickly learn two important lessons. Firstly, that you only earn what you're prepared to work for. And secondly, you only save what you don’t spend.

Handy hint: Talk to your teen about some different part-time job opportunities in the area. If they have friends who have part time jobs, see if there are any job opportunities where they work.

Shooting towards goals

Teenage years are the first time you get a sense of real freedom. Remember how exciting it was to start choosing how to spend your own money?

Whatever they're into, use that as leverage to get them to save. Whether that’s music festivals, the latest gadgets or wanting to achieve the freedom of learning to drive. The great thing is, the more they want the more you can encourage them to save towards bigger financial goals.

Handy hint: Ask your teen to list all the things they want, then help them to put a timeline on achieving and owning them from saving their earnings and allowance. You could even offer a parental bonus once they’ve hit certain targets to help motivate them even more. Read our helpful guide to help teens find work.

Calculating the costs

Discovering the costs associated with adulthood can be daunting but the later teen years are an ideal time to start preparing your kids for what’s to come.

It might seem hard to believe right now, but they won’t be a teenager forever. There will come a day, in the not too far off future, when they’ll be independently managing things like household utility bills, TV licenses, and council tax. Ah – the joys of adulthood.

Whether your teenager eventually moves out to university accommodation, begins renting a flat or even starts saving up for their own place, it’s important that they understand the true costs of flying the nest.

Handy hint: Ask your teenager how much they think utilities (such as electricity and gas bills) come to. Are they on the right track? Help them put together a monthly budget for when they move out – everything from food shopping to travel and rent.

Tips for a changing world

Looking after money these days means so much more than not losing your purse or wallet on a Friday night. Technology is advancing quicker than ever before, and for many parents, their teens are more familiar with the online world than they are, which means that making sure they’re safe online can be a real challenge. Encourage your teens to use secure apps and websites, create passwords for their details, and regularly check their bank balance and activity.

Handy hint: There are some great apps to help them manage their money and keep on top of their banking activity. For parents and younger teens, apps like Rooster Money are handy ways to keep track of spending and allowances. Services like Cleo (a budget tracking assistant which uses Facebook Messenger) and Mint (a budgeting app) can help them understand their spending habits and save towards their goals.

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decision. The opinions expressed within this blog are those of the author and not necessarily of OneFamily.

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