Personal Finance Lessons to Impart to Your Teen

Samir is fourteen years old. He aspires to pursue a degree in archaeology when he grows up. But right now, he wants to own the latest Dell to look cool among his peers. He pesters his doting parents every day to get him one. Sixteen year-old Disha wants to become a pilot after her studies. But she has a huge inferiority complex about her dusky complexion; she wants to invest in a whole lot of cosmetics which promise her a fair, glowing skin.

These are our teenagers. They are smart, cool and are able to figure out the snazziest of gadgets. However, deep down they are still children and learning to deal with their deepest complexes. Money management is farthest from their mind. Yet in a few years, they need to learn the nitty gritty of managing their own finances in a manner which is not only beneficial but also smart and ethical.

Help your child grow into a confident adult by teaching him/her the following money lessons:

Financial Success Does Not Come in a Day

Teenagers often live in a world of their own. Friends, gadgets, games, social media and outings rule their life. Somewhere at the back of their mind, they begin to look upon bank balance as the adult’s version of pocket money. If your teenager is living under such an illusion, start a dialog today. Break your own barriers and talk with your teen about how you struggled to attain your present state of financial independence. Be frank about the financial mistakes that you committed. Let your teenager know how they made you more prudent financially.

Financial independence is Cool

When Young Aakash wanted to buy the latest Play Station, his mother very gently suggested, that he start taking math tuitions during the weekends and earn his way through the gadget. Although initially reluctant, Aakash began to feel exhilarated once students began flocking to get coached by him during weekends. As his earnings multiplied, Aakash’s father helped him open a bank account. Now Aakash maintains a financial journal, where he records all his expenditures and earnings. Aakash is no longer a pestering teen. He is a confident, young man who understands how important it is to save and purchase, rather than just splurge.

Teach your child that being financially independent is almost like being the topper in class. Take pride in your child’s independence and encourage him/her to become more enterprising

Distinguish between the avoidables and un-avoidables

The next time, the young lady in your house wants to take her friends for a treat in an expensive restaurant, do not generously dole out a wad of notes. Instead ask your teenager if this expenditure is really necessary or can it be avoided? Can she and her friends rent out a DVD instead? You can offer to let them use your kitchen for making snacks.

Teach your child the importance of understanding the difference between “avoidable” and “unavoidable” expenditures so as to avoid financial heartburn in the future. This will help him/her to develop into rational adults.

Question Your Priorities

Daily allowance is for babies whereas monthly allowance is for young adults. As your child steps into teens, change the daily/weekly allowance into a monthly affair. Encourage your child to draw a monthly budget and prioritize his/her expenditures. For example, does your daughter really need that expensive imported cream? Would she rather not spend that money towards buying a library membership?

Finally, discuss, debate and turn the financial discussions with your teen into fun lessons. Let your teen realize that credit score is as vital as the SAT score for making a grand beginning in life. Start imparting money lessons to your teen today.

Sridevi Datta is a Cost Accountant. After working as a Business-SME in a leading E-learning centre, she now  blogs regularly at The Write Journey.