For most adults who run their own businesses, January is typically a very money-oriented time of year: the deadline for tax returns looms; for some, a new financial year begins; and, for many, bank accounts are still recovering from Christmas! What better time, then, to start introducing the young person in your life to some budgeting basics?
Teaching teenagers about money management sooner rather than later carries a range of benefits. Not only will this practice enable them to learn about the value of money – and manage their own finances effectively – but also it will help them take the leap from adolescence to adulthood more successfully when the time comes (dealing with the increased responsibility of going to university or college, for instance).
Teaching Teens About Money Management: Tips
It’s not always easy to demonstrate the importance of sticking to a budget, and using bank accounts, savings accounts, and debit cards with care – but your child will look to you to set an example. Your behaviour and guidance will play a crucial role in determining how the young person in your life will manage their money going forward.
Whilst many schools teach some budgeting basics, we wouldn’t recommend that parents rely solely on the curriculum. Do encourage your child to start thinking about these areas sooner rather than later. Here are our top tips for introducing your teen to money management:
- Give a sense of ownership. Give your children the responsibility of managing their own expenses. A useful way to introduce this concept is to work together to develop a list of monthly expenses. Whilst working on this, pinpoint those which are ‘essential’ expenses and which are ‘optional’ extras.
- Work out, together, what their income is. This might relate to pocket money or a part-time job.
- Help them subtract expenses from the listed income. If they intend to spend more than they earn, you can help them work out which expenses can be removed. Or, if there’s a big expense that they’d like to save for, you can discuss the option of taking on some part-time work and how much they’d need to save each month to achieve their goal.
- Think about savings. As mentioned above, there may be a cost on the horizon that your son or daughter wants to save for; or, if the budget is looking very healthy, there may be leftover money that they can use to start building a ‘rainy day’ fund. At this point, you can look into savings accounts together and discuss the options.
Once that’s done, let your child manage their monthly budget; by doing so, they will start to think about money and learn how to spend within their limits (and how to handle unplanned expenses). You will need to be on hand to guide and support, but resist the urge to instantly ‘bail’ them out if they run into trouble: they need to learn how to avoid spending money if they’re going to go over budget!
Money Management Apps for Teens
To the dismay of most traditionalists, the humble piggy bank is no longer an appealing option for tech-savvy teens. Instead, there are lots of apps on the market that aim to help children and adolescents track their money: from apps that allow parents to provide a digital allowance, to those that help teens set goals to correspond with their budget. Here are some of our favourites:
Rooster Money. Aimed at children four and above, this app allows parents and children to track pocket money. Children are encouraged to set targets to do with how much money is to be saved, spent, or given; and parents can even allow children to earn extra pocket money by completing certain tasks (like taking out the rubbish). The basic package is free.
iAllowance. This fantastic free app has lots of options. It gives parents the option of running different banks for different children all at once, as well as setting tasks and giving rewards. It allows children to monitor their pocket money and check their progress over time, with lots of attention-grabbing graphics to help make the process as interesting and easy to understand as possible.
Go Henry. Designed for children between the ages of 6 and 18, Go Henry is an innovative app for managing and giving pocket money. Users are provided with a pre-paid contactless debit account that parents can control via the app, allowing parents to give their kids digital pocket money and even increase how much they receive on the basis that they complete specific chores (which can be set by parents). Parents can block cards instantly if they wish, as well as choosing where the debit cards are used: online, in shops, etc. Go Henry costs £2.99 per month per user.