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Wednesday’s Parent: A Crash Course in Money Management

 

money managementBudget? For teenagers. Why on earth would they possibly need to learn to budget? Their every need is met: food, shelter, clothing and for most entertainment. The baby boomer generation has made sure that our kids want for nothing and their every need is met immediately. What is wrong with this picture? Simple. We’re raising a generation of children who end up drowning in debt as adults.

Before you send your child off to college and expect them to understand how to budget and not abuse credit, it’s time to give them a crash course in money management.

Money 101-The difference between wants and needs

This is the foundation upon which every other lesson is built upon. We all say it, especially our kids: I need (fill in the blank). But is it a need, or a want. Most of the time, it’s a want. And if it’s a want, you can 99.9% of the time, do without it. Understanding this concept will help your kid learn to spend wisely and if you teach them to ask this question before they make a purchase, it’s going to change their lives.

Money 202-Don’t spend more than you earn

Adults (or most adults) understand this concept. If your child doesn’t learn this before college, it is open season for college students by the credit card companies. It’s easy to “swipe” the card and rationalize they can pay for it later. Before long $20 becomes $50, $50 becomes $100, and $100 becomes $1000.

Money 303-If you want it, you have to earn it

This is an easy lesson to teach your kids, but many parents don’t. Start early with chores, then summer jobs, and then encourage them to save for that high ticket item. Purchasing a new car for your teenagers doesn’t teach them this lesson. Instead, consider a used car that needs some work, but only if they contribute some of the funds.

Money 404-Don’t depend on a rich benefactor

We’ve all seen those shirts in the mall that say: “My kid thinks I’m an ATM”. This is the mantra of today’s generation. If I want it, mommy and daddy will get it for me. If I want to go to college, mommy and daddy will foot the bill. Encourage them to always have some “skin in the game” when it comes to important purchases. If it’s their hard-earned money, it will have more value.

Graduate Course-Create a budget and stick to it

You can start early with an allowance and some weekly spending money for essentials. Explain to them that this is their money but it’s their responsibility to use it wisely. When it’s gone, it’s gone. They will have to wait until the next week before their funds are replenished. It’s as simple as sitting down with them every week and writing down how much money they have and what they will need to spend it on.

Kids who learn these lessons before college will be happier adults. They won’t become a slave to debt and they will work for everything they acquire in life.

For more budgeting tips read Wendy’s blog:

6 Circus Lessons for Balancing the Budget

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2 Responses to “Wednesday’s Parent: A Crash Course in Money Management”

  1. […] For more budgeting tips for teens before college check out Suzanne’s blog:  Wednesday’s Parent: A Crash Course in Money Management http://www.parentscountdowntocollegecoach.com/2014/02/26/money-management/ […]

  2. […] For more budgeting tips for teens before college check out Suzanne’s blog:  Wednesday’s Parent: A Crash Course in Money Management  […]