Growing up, you probably overheard discussions about money through your parents. The experience of how they handled money may have manifested itself in how you relate to money as an adult.
As a parent, you want a better financial life for your teen. And I’m not talking about them having the trendiest clothes or the coolest gadgets.
Most likely, you want them to have a comfortable and secure future. This future will depend on the foundation you build upon when they are still under your roof.
Today, ParenTeen Kenya will help you raise conversations about money and guide you on how to introduce your teenager to saving and investing.
1. Explain How Money Works
Explaining how money works is an excellent opportunity to foster respect for every penny your teen gets.
Sit them down and explain the concept of money. For instance, how you must work to get paid and afford everything you offer them.
Give them a rough idea of how much you earn and how you budget to cover your monthly expenses.
Being open with your teen about your financial situation lets them learn how money should be used. As a bonus, your teen also learns to appreciate your sacrifices.
Additionally, teach them how money works when you take a loan from a bank or use mobile services like M-shwari; a micro-credit service that enables you to borrow money.
Teach the older teens that taking a loan should be done wisely because of the interest rate. For instance, if your teen borrows Ksh 2000, the total amount to be paid will be Ksh 2,150 ( kSH 2,075 and an additional Ksh 75). This lesson will teach your teen the consequences of taking a loan for personal use.
2. Explain the Principles of Money
Now that you have explained how money works and its role in your lives, it’s time to give your teen an advanced lesson on money—the principles of money.
The principles include earning, saving, and investing. These lessons will help your teen build healthy relationships with money, delay gratification, and plan for the future.
As a parent, you can help your teen set attainable goals appropriate for their age, like saving for a new gadget or shoe, planning a road trip, or starting an age-appropriate business.
Let’s break down how to ensure they achieve this goal.
Allow Them to Make Their Own Money
This simple strategy helps teens have a sense of achievement and value for hard work and instills an understanding of the importance of money.
There are several ways you can encourage teens to make their own money. The following are ideas to get you started.
Household Chores
The idea behind household chores is to pay them for activities they would do and earn money in the real world. Making their bed and washing the dishes is not among them.
Think of chores like fixing things around the house or caring for pets and domestic animals. These are all valuable skills they can get paid for in the real world.
They can also lend a hand to your neighbors with tasks they need to be done, like washing their cars or verandah, tending their yards, and babysitting.
Selling Unwanted Toys and Clothes
Your teenager can post their items online or market to people they know and sell stuff they don’t need anymore. This skill will help them learn to make money ethically.
In addition, strategizing how to sell these items helps your teen learn sales skills and how to market their products to potential customers.
Teach Your Teen to Save Money
Saving money can be challenging, but it helps your teen learn about delayed gratification. This principle protects them from careless spending and gives them firm control of their money.
Remember that telling your teen to save without explaining why is pointless and won’t have the results you had in mind.
Do this instead.
Ask your teen what they are saving for, and then help them break it down into manageable steps.
Let’s say your teen wants to make and sell beaded jewelry. Further, they have given you their plan to buy a variety of beads and other items needed for the work. Discuss how they can use their saved money as capital and help them create a simple business plan.
Another way to encourage your teen to save is by giving them a target amount and offering to add the balance to buy that gadget or outfit they wanted.
The above ideas will encourage them to adopt a saving habit. Next, help them open a savings account, or you can keep the money for them until they reach their saving goal.
Guide Them in Investing Their Money
The trick about investing is that it takes time for results to show.
Investing can mean using their saved money to start a business like the one we mentioned above. Your teen will learn that they can double their money when they sell the items for profit.
Another way you can help them see the value of investing is to ask them to lend you their money. Promise to return it with interest on a percentage you agreed together.
Afterward, you can encourage them to open an account and put their money in the money market fund or invest in the stock market when they are over eighteen.
3. Engage Your Teen in Budget Talks
When planning your budget, consider that your budget affects more than just you. Your kids are also affected by the financial decisions you make.
Budgeting will help your teen appreciate the value of what they have. It also helps them understand compromise, especially when money is tight. Consequently, your teen will learn to adjust to different economic situations as an adult.
Having frequent money talks together is the best way to involve your teenager in your family budget. You can come up with creative ways to do it. For example, take advantage of your car rides to school or when having family dinner.
The more you talk about money, the better their understanding.
Besides, you can find teen-friendly areas of your budget to discuss, such as entertainment, snacks, or budgeting for your next road trip.
Another way to have budget talks is by creating a visual map. This budgeting process benefits both you as a parent and your teen in having visual reminders of your financial goal.
You can create your family visual map on coloring paper and paste them somewhere everyone can see, like on the fridge. You can then use colorful illustrations to showcase your progress.
For example, your family plans to visit The Maasai Mara National Park during Christmas. Create a colorful diagram detailing how much you need to save for expenses during your stay.
A Head Start to Money Conversations With Your Teen
As a parent, you want to teach your children various life lessons. You want them to avoid making the same mistakes you made growing up.
ParenTeen Kenya has given you a guide to starting the conversation about money and its value. A head start to financial literacy that will enable your teen to have a bright future.
Get in touch with us for more guidance on teaching your teenager essential life skills.
Frequently Asked Questions
Why Is It Important to Teach Teens the Value of Money?
Teaching teens the value of money helps them learn to manage money at an early age and make better financial choices in the future.
What Other Values Should Parents Instill in Their Teens?
- Being respectful
- Valuing the family
- Effective study hacks
- Understanding that making mistakes is part of life
Why Should You Teach Teens About Personal Finance?
- Helps them avoid pyramid schemes
- Enables them to prepare for financial emergencies
- Gives them a head start on being financially independent
- Helps them avoid sinking into debt
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