There’s nothing more frustrating than having your 17-year-old tell you he expects you to pay for his car, gas, college and spending money, just because you are the parents and that’s the way it’s “supposed to be.” The only thing that may be more frustrating is teaching a teen the value of a dollar.
Teaching a teenager about money management is necessary for the child’s financial success in the real world. Teens who do not know enough about money management may soon find themselves back at Mom and Dad’s house shortly after the big, independent move out!
In order to teach your teen and help her on her way to money management success, try teaching her the skills using a win-win technique. She will earn her own money and keep it all, provided she is able to “pay” her bills on time. In the end, you will not only teach her the value of money management for survival, but the importance and pride in saving. Summer is a great time to start this project, as it allows more working time for the go-getter teen and will be less disruptive to school for the teen that struggles with her money management.
First of all, in teaching money management, make sure your teen has a job. For best results, allow the teen to choose the job, and don’t put any restrictions on income or hours. Once your teen has his job, sit down together and figure out how much he will make in a week, in a month, and in a year. Based on his income, and not current costs of living, assign your teen a monthly rent. Rent should be approximately one week’s pay.
The first assignment in your teen’s money management class is that rent is due the first of every month. Assign a reasonable late fee as well. Also, have a back up plan for a non-paying teen. Buddy up with another set of parents and ask if your child may spend up to two nights at their house upon “eviction,” with food not included in the stay! Be sure to teach the other parents about your money management project so that this part doesn’t backfire on you!
It’s time to tackle bills in the money management game! Teaching your child about the responsibilities of paying bills and the repercussions of not paying them is also an important part of teaching money management. Again, going by your teen’s income, set up monthly bills. Work with your teen to decide necessities, etc. Don’t be surprised if your teen says he chooses not to have cable T.V. in order to cut down costs. That’s fine! Just be sure he doesn’t watch it at your house! Teach him what his money management decision truly means. Be sure to include cell phone, food and insurance in the monthly bills. You will be the bill collector for all utilities. Again, teach the importance of paying on time by assessing late fees on all bills.
Your teen is sure to struggle with this money management project at first, but teaching him how to manage his own money will help him in the long run. The best part of the money management lesson is yet to come! When summer is over, hand your teen back all of his rent and bill money. He will be surprised at how much he was able to save through simple money management. Better yet, start a savings account for him and teach your teen to keep saving throughout the year.