Therefore, summer provides the perfect time to help them learn how to manage their money. These summertime personal finance tips are invaluable for preparing your teens for handling their own finances.
10. Make it Fun – Learning about money does not have to be a boring class or lecture in the living room. Learning about money should be a fun and rewarding experience. Because, ultimately it is money that allows us to do the things we want to do. Learning to manage money as a teenager helps teenagers ensure they always have money for their summertime activities. It is our responsibility as parents to present it in a way that engages them. There are a multitude of free online resources from some great national organizations and non-profits that can help you and your teens learn about money in a fun and engaging way.
9. Celebrate their Success – Help your teens establish some financial goals for their summertime money. Help them establish some goals that inspire and motivate them to work on managing their money. Get their input on what would be a great prize or reward for accomplishing their summertime financial goals.
8. Free & Fun Entertainment – Teens today spend a lot of time and money playing games online or on their gizmos and gadgets. They expect to be entertained and are willing to pay for it. They have missed out on a lot of the simple times we experienced as kids and teens in our lifetimes. However, if our teens have to pay for all of their entertainment out of their money, they may make different choices. This also provides us a perfect opportunity to encourage them to unplug and use their imaginations to have some fun for free. Some of the best times in our lives are the simplest times.
7. Generosity – Generosity is an important financial lesson for our teens. Because it takes the focus off of them and gets them thinking about how they could use their money, time or talents to help someone less fortunate than themselves. The concept of generosity helps our teens develop a different perspective regarding their money.
6. Savings Account – “Pay yourself first” is one of the most important financial lessons we can teach our teens. Therefore, we should work with our teens to help them commit to setting aside money in a savings account from their weekly income from part-time jobs, mowing lawns or weekly allowances. We should also discuss the investment aspects of a savings account by explaining how interest can impact the money they set aside. We can also discuss using the savings to invest in the stock market or other investments to illustrate how their money could grow over time.
5. Cash Only – Teens do not have a concept of money. Therefore, it is critical that they learn to manage money by only using cash. The convenience of a credit or debit card does not illustrate the actual exchange of their money for their purchases. They simply learn to swipe a card for any and every purchase never stopping to realize the impact that each swipe of the card has on their money and budgets. However, if they have to use their hard earned cash to pay for their purchases it provides a very real illustration of their money disappearing before their eyes. Helping them develop the habit of only paying cash as opposed to using credit will serve them well throughout their entire lives.
4. No Cash Advances – I suggest as parents we refrain from advancing them additional cash above and beyond their summer incomes. If we keep advancing them money after they have spent all of their money, we are reinforcing their spending habits. This pattern may ultimately impact their financial habits after they have moved out. Therefore, I suggest sitting down and discussing weekly expenses and who is responsible for paying each expense. You and your teen can work out an agreement that works for everyone and also creates some boundaries so they learn to manage their money.
3. Needs vs. Wants – There are a million things competing for our kid’s money, time and attention. It is absolutely critical that we help them learn to not make impulse purchase decisions. They must learn to evaluate each of their purchasing decisions within their budgets. They also need to develop the patience to wait and save for something as opposed to wanting to charge everything they see. The “needs vs. wants” analogy is a great way to help teens stop and think through purchasing decisions before they make them.
2. Control Spending – We live in a consumer driven world that encourages excessive spending. As a result, we become burdened by excessive consumer debt because our spending exceeds our income. This is especially true for teens and young adults. Their lives revolve around online activities and social media sites. Teens are constantly bombarded by advertising with every online visit. They also face a lot of social pressures to wear the latest fashions and have the latest tech toys to keep up with other kids. They must learn to control their spending and live within their incomes before they become consumed by debt as young adults.
1. Teen Budget – A simple budget should include their estimated weekly or monthly income from chores, part-time jobs, allowances, etc. In addition, the teen budget should also list expenses they will incur on a weekly basis during the summer. It is a great idea to get them to write down all of their expenses. Then review the list with them to ensure it includes items that may not have considered. Help them create an accurate budget. Then help them review it every few weeks to see how they are doing. Set some goals and reward them for achieving them. The best goal or reward is helping teach our teens to responsibly manage their money before they are on their own.
I hope you have enjoyed this article on the Top 10 Summer Finance Tips for Teens. If you know someone who would enjoy this article, please forward it to them.
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