How well does your teenager manage money?
Graduating from high school and moving to university is a big step with a steep learning curve, especially when it comes to finances. These tips for parents of teens help you start the conversation with your child about money and their future financial independence.
How to teach your teenager about financial responsibility
Your child may be feeling stressed over how they’ll manage their money, or they may be totally blasé about all things financial. Making sure your teen has a basic understanding of finances and how to manage money is essential before they move away from home. This guidance for parents and caregivers about teen money management should help alleviate everyone’s anxiety.
Tips and tricks for budgeting
Helping your child understand how to plan a monthly budget is one of the most useful things you can do to enlighten them about the ways of adult life. Before you crack out the spreadsheet, there are tools you can use that might be more appealing to your child.
- Budget Planner is a free tool from ASIC’s Moneysmart website that helps work out where your money is going and lets you add your own items.
- Your child can also use Simple Money Manager, a quick and easy budgeting tool with support in multiple languages and audio content to explain each section.
Get into the habit of saving
Most uni students don’t have unlimited funds, so planning ahead and making economical choices are an essential part of teenage money management. They’re also good life skills and, once learned, will serve your teenager no matter how much or how little money they earn in the future.
- Pay yourself first. One of the best habits to acquire is to put a little money away in long-term savings. If your child is earning $450 in a calendar month, they’re probably eligible for superannuation. It’s a way to start building a nest egg for their first home or retirement.
- Isolate your savings. Encourage your teen to put a little away every pay period for larger purchases like holidays. The best way to do this is to make it hard to impulse spend. By not having a debit card attached to their savings account, your child will have to make a deliberate decision to transfer money out of savings.
Pay your expenses
Help your child get into the habit of paying their expenses when they get paid – but after they’ve moved money into savings. That way, they won’t have to worry about bills hanging over their head.
Avoid the debt trap
One of the quickest ways to financial independence is to avoid unnecessary debt. Unfortunately, your child is going to be offered every sort of debt product on the market as soon as they move away from home. Make sure they understand the true cost of debt and why credit cards, Afterpay and personal loans are a trap that can take them years to escape.
Make good decisions about the rest
How students spend their disposable income can make a big difference between enjoying university life and living on a bag of rice. Your child may not be aware of ways they can make their money go further. Here is advice parents can give teens to help manage their money:
- Counsel your child to carry their student ID with them and always ask for a student discount.
- Utilise Student Edge. It’s a fantastic resource with student discounts in multiple categories including entertainment, health and fitness, and fashion and beauty. Your child can also get the Student Edge app.
- Explore Murdoch’s support services for students, including places to eat, drink and socialise right on campus.
- Encourage your child to visit op shops and used bookstores before buying new. They can get top quality for a fraction of the price on clothes, household goods, books and records.
Money skills for teens – extra resources
Sometimes teens will listen to an expert before they’ll hear the same advice from their parent or caregiver. Suggest to your child these resources as a good place for more information.
Barefoot Investor newsletter provides free finance and budgeting advice every Monday and answers questions from readers. Believe it or not, it’s a fun read.
Barefoot Investor books – Scott Pape has penned two excellent books to help Aussies manage their money. You can order both on his website.
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- The Barefoot Investor for Families: How to Teach Your Kids the Value of a Buck
Money School: Become financially independent and reclaim your life book – Lacey Filipich focuses on how to become ‘time rich’ – another way to describe being financially independent. She explains her time rich philosophy in a TED Talk, a path she started on when she was 10 years old.
