All parents send their children to schools or colleges just to make themselves prepared not only for the survival but also to excel in every field of their life. When we the parents and teachers teach them various lessons like history, language, politics, science, economics, physical training and many more we often forget to teach them how to handle your money or in technical terms which we call ‘Managing Personal Finance‘.
Being a parent, one must be aware that your child has to know how to manage his/her money for a satisfied financial life. If your child has reached his teenage then it becomes a must for them to teach money lessons. Now a days a number of teenagers are found who have started earning money in small amounts by various means (most are online) like selling craft items, giving tuitions, being a youtuber etc. If your children got a good grasp of money managing in his initial stage of earning life, he/she would be sure to go far in his financial life. A poor management of personal finance is like the small leak in a big ship which becomes the reason for sinking the ship.
Here we have bought a few must know the lessons of personal finance which your teens should be informed of.
The budget making is the first thing that should be thought to our teens while teaching them personal finance. The budget can be prepared for allowances, the small earnings as well as for the paychecks which make the household expenses run. Teens must understand the fact that making a budget and sticking to it can make a person enjoy his money in the best possible way while keeping a space for saving a part of it for a future. Parents can even show their monthly budget to their teenage children for a better understanding of making and implementing the monthly budget in their lives.
Maintaining An Expenditure Diary/Sheet
The next thing teenagers must understand that a budget making cannot give the complete result until and unless we track our expenses. The best and proven way to track expenses is to keep a note on every expense we make. Till a few years back, such record keeping was done by writing or maintaining a diary. But nowadays such tasks can be done using excel sheets which is much convenient in terms of durability, accuracy, and accessibility. All of our teens are familiar with those applications so maintaining an excel sheet for tracking expenditure will not be a difficult task for them.
Difference Between Good Debt And Bad Debt
Taking a debt or being under a debt has become a normal thing in any person’s life. Your kids in their teenage must be knowing if you are servicing any kind of large debts like a home loan or a business loan. At this certain point of time, one must teach their children to distinguish between good debt and bad debt. Without the understanding of a good and bad debt they may take debts very lightly and finally, they become unable to pay their debts. Being a responsible parent of a teenager, one must teach the children the consequences of not paying a loan, being a bankrupt and auction of property of the borrower.
Setting The Financial Goal
When you are teaching your children about making a budget and following it, you must teach them to set a financial goal too. A goal setting makes a person more focused on sticking to the prefixed process of making and following the budget. Reaching goal (no matter if it is a small one) will make your teens get the feeling of achievement and they will be encouraged to set bigger financial goals in the future. If your children are doing the same then as a parent you can be assured that your children are going to excel in their financial life.
Knowing The Value Of Money
The value of money and the hard work needed to earn the same should be one of the most important lessons to be taught. If you provide an abundance of money to your child they would never know the value of it and will build up a habit of spending the same meaninglessly. Additionally, if you don’t give them any hard cash at all to spend it according to their will, they will miss the most important lesson in personal finance. The perfect balance and what all the parents had to do for earning that money must be known to your teens. The must not grow the idea that ‘money is something which everyone has’. You must be much careful and calculative while handling how to teach your teenager the value of money.
Purchasing When We Need Not When We Want
The ‘need’ and ‘want’ has a very thin line to differentiate. Often we the elders are failed to do so and used to purchase things which we just want but not a need. Such behavior of parents makes an impact on the children and they tend to do so. Such sensitive teachings must be taught at a young age so that the ‘ shopping monster’ within us can be defeated and we buy thing only at necessities.
Making Best Use Of The Limited Monthly Allowance
Making the best use of monthly allowances is one of the most important money management activities for youth. Make sure that you provide the same amount of allowances every month and at the end of the month if they are out of cash and ask for more you don’t welcome the request. This will make them learn how to make the best use of the limited fund. In long run, such practice will make them prepared if someday they need to face a financial crisis.
The Importance Of Emergency Fund
Keeping an emergency fund and the importance of the same is one of the basic money management skills for youth. Every parent must encourage their child to keep an emergency fund from their monthly allowances/earnings. The emergency fund should be included in the budget planner for teenagers. Inculcating such habits are certain to make your child stand strong in any cash crunch in days to come.
Handling personal finance efficiently is needed in every aspect and stage of life. While the teaching and learning process will be going on, your children may sometimes fail to do the instructed or deny accepting your thoughts. In such situations, it better to be stiff and let them face the consequences of not handling their money properly. Such situations are sure to end up with a life skill to your teenager children. With such learning, your child will know to handle his money and never fail in the time to come when he/she will be loaded with a number of responsibilities.