6 Ways to Teach Teens About Money Management

If you’re a parent, mentor, or friend to a teen, you know that young adulthood brings many challenges — dating, social tensions, and mental health are just a few. One of the most important yet often overlooked challenges is the burgeoning burden of financial literacy. As teens mature, they will get a job, take on expenses, and enter the world of financial responsibility. Young adults who are unprepared will likely make unwise decisions that could seriously impact their future. Help your teen avoid this by following these six tips for teaching money management.

1. Offer an Allowance

The benefits of providing an allowance are clear — a teen can enjoy the freedom of financial resources while also learning the ramifications of unwise spending. According to experts, though, offering an annual lump sum allowance is a better strategy than doling out monthly stipends. This is beneficial because it allows young adults to develop a long-term strategy for money.

2. Let Them Make Decisions

You can also help your teen learn financial literacy by allowing them to get involved in your household’s financial decisions. Shopping is a great opportunity to do this. When you’re at the grocery store, for example, you can prompt your teen to consider all of the available options for a given product and choose the one that’s the best value.

3. Start a Savings Account

Starting a savings account in your young adult’s name is one of the best things you can do for their financial future. In addition to the obvious financial benefits, it can be a learning opportunity, too, as you tell them about the interest rate and potential growth that the account offers. You can invite them to make their contributions to see the balance further grow.

4. Play Educational Games

Games are one of the most effective tools for learning any subject, and financial literacy is no exception. There are plenty of money management games that can help your teen learn essential skills and understand how budgeting works. Make time to play these games and initiate a reflective discussion afterward, too.

5. Eliminate the Stigma

Unfortunately, there is a major social stigma surrounding the discussion of money. As people shy away from the topic, misinformation proliferates, but you can stop the cycle and work to minimize this stigma. Simply initiate a conversation with your teen about what money means, how it can be used, and why it’s important. This will help them feel comfortable discussing their finances and taking control of their financial future.

6. Encourage Entrepreneurship

How you plan to make money is an essential component of any finance-related discussion. You may encourage your teen to start applying for entry-level jobs, or you might help them start their own business. If you choose the latter, encourage them to develop a solid business ethos, invest their time, and promise only what they can deliver to customers.

Teens and Young Adults Can Benefit From Financial Guidance

Sound financial advice is an imperative resource for teens and young adults, but unfortunately, many find money role models in the media rather than a mentor. This can lead to unrealistic ideas about finances as well as unhealthy spending habits. Help your teen establish financial literacy by empowering them with financial guidance.

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