“Balancing your money is the key to having enough.”
Teaching you near adult about saving money tips and money management is not as simple as telling a kid why money is important. You may have to seek an audience with a teenager locked in his or her room, or do a PR job to get his or her attention away from friends, loud music, and other superficial needs. But it can be easier than you’d expect.
Teenagers are likely to be more receptive when you talk in terms of their needs. In fact, before you start imparting to them the value of money and run the risk of nagging more than teaching understand first where they spend money.
To help you out, we culled the Internet and selected what we believe are six excellent pieces of advice.
Invest not spend:
This article has a great advice on teaching your teenager the real value of money: it’s not for spending, but for creating more money. Instilling in them the long-term value of investment is one lesson they’ll thank you as they will realize soon salaries are hardly able to create wealth for them.
As a parent, you can illustrate the importance of investment by pointing out how your teenager enjoys everyday necessities.
Example: How much you’re paying for the house today and its net worth by the time your kid inherits it. A simple math can also help show your kid that investing 10% of his or her income at a 10% return, his or her nest egg can be bigger than the annual salary.
Teach them the art of budgeting
Good money management starts with a budget. To help your teenagers get off on the right foot, the authors advises to give them a monthly budget. A predictable inflow and outflow of cash will help kids get a sense of budget, that the higher the spending, the lower the treasury is and vice-versa. This strategy is better than handing out bills to them when they need it.
Allowing them to forecast the money in their wallet and the period of time needed to buy something also trains them to watch out for spending more than what they earn. Teenagers have a knack around the Internet. Use this skill to find promo rates or best-value prices for you and them.
You would think that paying bills is a “common sense” lesson, something that people automatically know how to do when they become adults, but that’s not the case. It’s important to assign a bill to your teenager, whether it’s their cellphone bill or their car insurance bill. Send them a payment reminder email or, better yet, just tell them the date their payment is due. If their payment is late, they get charged a late fee or they lose a privilege, like not being able to go out with their friends.
It’s important for teenagers to realize that when they don’t meet their financial deadlines, there are penalties. It’s much better for them to learn the lesson young, under their parents’ roof, than for them to learn the hard way by incurring high interest charges and late fees from credit cards after forgetting to pay their bill.
Know About Credits:
Learn about credits – good credit and bad credit. Understand the importance of a good credit profile by paying off the full credit balance every month. Get a clear understanding of the difference between debit card and credit card. Analyze each one’s benefits, security issues, percentage rates, liability, and security. Be aware of the impact of credit score on financial planning.
Set Clear Goals:
Set clear goals to effectively save money. Your goal could be as simple as buying a music instrument or a hard disk. Accumulate amount, gradually, until you have enough to meet your goal. Thus, you get habituated to saving towards a goal, without distraction. In the long run, you can set crucial financial goals in life and achieve them with ease.
In conclusion, teens are to be more involved in money management to get acquainted with finances. If you feel that you need more advice on money management, approach financial advisory like ArthaYantra. Learn the key financial terms, ways to earn, goal setting and money saving. Thereby you are not just learning to save, but are helping yourself to get rich in life.
Create Saving Plan:
Have a clear cut saving plan to get your job half done. To begin with, take three containers and label them as ‘gifts and charities’, ‘spendable amount’, ‘savings’. Calculate your expenses and leftovers. Fill in the containers accordingly. It is amazing the see those containers filling. Once filled, deal with each container differently, meaning use the money in each container only for the dedicated purpose.
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