Some parents have almost as difficult a time talking with their teenagers about money as they do talking with them about sex. But teaching your kids the value of money is critical to their survival in the real world. Here are a few tips to help them on their way to financial independence:
1. Have the talk. If you don’t talk about money, your kids may end up thinking that it grows on trees and they don’t have to worry about it. They want to buy the things their friends have, with no concept of where the money comes from, or the difference between needs and wants.
2. If you feel awkward talking with your teen about money, look for help. Mymoney.gov, AmericaSaves.org, ING Direct’s Planet Orange, and SchwabMoneyWise.com are some of the many websites designed to help parents educate themselves and their children about money.
3. Don’t give teenagers an allowance. A study at the University of Washington that examined more than 50 years’ of allowance research found that the kids who received a regular, unconditional allowance thought much less about money and were more likely to grow up to be “slackers.” Giving teens an allowance for chores is also a bad idea, as it teaches them that working for money isn’t fun.
4. Be aware of the messages you send. How you talk about money and how you manage money will strongly affect the way your teens learn to manage money.
5. Encourage your teen to get a job. Help him or her figure out how to set aside part of each paycheck in a savings account.
6. Help her save for something special. Every teenager hankers after something she cannot afford: a car, a laptop, a camera. Teach your teen to funnel a small part of her income into an interest-earning savings account for her dream purchase. She will never forget the thrill of watching her money grow and paying for the item herself.
7. Don’t give your teenager a credit card. Many kids think of credit cards as a magic wand they can use to buy things, without ever thinking of the real cost of an item.
8. Help your teen avoid debt. If he spends $300 on text messaging or on fancy apps for his iPhone, use those mistakes as lessons.
9. Let your teen help you write checks and balance your bank accounts. Use an old-fashioned checkbook rather than paying online. When you make payments over the Internet, the money seems fictional. Writing a number on a check, signing it, and putting it into a stamped envelope gives teens a more concrete feeling about money and its meaning.