Teaching our teens to be financially savvy is one of the more important things we fathers can do to help our teens become independent young adults. I have found with my children, helping them become financially ready to be on their own has been a combination of active teaching and role modeling.
Give Your Children An Allowance
Now, I am not suggesting you just open up your wallet and start passing out bills to your children. But, when children are taught to handle money responsibly from a young age, they have a higher likelihood of being responsible with their money as they become adults.
I have developed a very careful way to give my children an allowance to ensure it doesn’t ruin my kids.
- Start children’s allowances at 5-years old, so they become used to handling money.
- Allowances are calculated by age, where each child receives a dollar amount which equals their age, i.e., 5-year-old receives $5, a 14-year-old receives $14.
- No payment for regular chores, but money can be earned via extra jobs like repainting the fence.
- Allowances are given on a schedule such as once a week, bi-weekly, or once a month – whatever you deem appropriate. Once the money runs out, no more will be given until the next time allowances are scheduled.
Model Responsible Spending For Your Children
As someone who has been self-employed for most of his life, I have always kept a strict budget. My wife is also a fairly frugal person, so we have been a good match. But for our children, budgets and frugality wasn’t something easily understood. Since there was always plenty of good food, new school clothes, a comfortable home, and other essentials, they never understood why us parents were so careful with our money. But even if they didn’t understand at first, through our careful role modeling, all our children did eventually understand.
One turning point instance for my oldest son was my old 1985 Honda Accord. One day after school, I was on pickup duty and swung by the middle school first. After my oldest son got into the car and I headed to the elementary school, he asked me why we only had old cars and why we didn’t just buy a nice car.
I told him that I had paid off this car years ago, so I didn’t need a new one. He was still pretty convinced that all I had to do was walk out and pick a new car. After we reached the house, he and I went and looked at the prices of the cool cars he thought we should be driving. Then I showed him a car payment calculator to help him visualize how the payment system worked. As he had been receiving an allowance for years, his mind was fairly boggled by how much money a car could cost.
From then on, I didn’t hear a word from him on the subject of new cars. Instead, the next time I went to do an oil change, he came out in grubby clothes and asked to help.
Parents Should Involve Children In Some Financial Choices
It is important as your kids grow up that you teach them how family finances run. This teaching can be a sensitive subject for many parents, especially if there have been financial struggles. While I am not recommending you burden your children with all the details of your finances, older children and teens should be allowed to participate in financial decisions which will affect them. Not only does this help build up your children’s financial knowledge, but it helps empower children in the relationship with their parents.
One example of this is when my wife and I were debating what to do as the main family vacation this year. I suggested we bring our children into the discussion, so we called a family meeting and asked for their suggestions. My wife and I gave the overall budget for the vacation and allowed our children to throw out their ideas.
After helping them narrow their ideas to the top three, we helped our children see how much the various steps of vacation planning cost. While my youngest daughter argued that she would only eat peanuts for three days so we could all afford to go to Disney World, she eventually admitted that it was probably too expensive and eating peanuts only was not healthy. Eventually, our family had mapped out a road trip to the Olympic National Forest where we would spend a week camping and fishing.
Through the involvement of my children, they thoroughly enjoyed our family vacation, and there was minimal grumbling since it was something they had all helped plan.
It is tough to make sure you have taught your children enough about finances, and you will never really know until they have left home to try their wings. But, by working with them when they are young and being a good example of how to handle money, you will give your children a better start than many others.
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This post is republished on Medium.
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Photo credit: iStock