How to raise financially responsible teenagers!

Children are constantly asking for new toys, the latest video game or the trendiest jeans on the market but what they don’t realize is the effect that spending has on the parents. We must help our children learn to manage money. It’s never too early to learn the value of money. The earlier you teach your child, the more prepared they will be to manage their own money.

As a small child we can start to illustrate what it means to save. Children love to collect coins so a great idea would be to set up a family piggy bank. Educate them that they can save all the coins and then purchase that one toy that they’ve been wanting and asking for as soon as the piggy bank has filled up.

Once your child starts to reach the age of 10, they start to understand the value of a dollar and this could be an opportunity to get them to earn and save money. Allowance is a good way to teach them the importance of earning money. Use your discretion as to whether you’d like your child to earn the allowance through chores or putting a dollar amount on a specific duty such as plucking the weeds from your neighbour’s yard for $10. You will want to help your child get into the habit of putting all or a portion of the money earned into a savings account.

Around the age of 16, many children may have part time jobs and understand how to earn money, spend money and not just through cash. Teach your teenager how to track their spending so that they are not spending more than they earn. Teach them to balance their chequebook. Your teenager is now at a very important age where the decision for university or college has come and the decision to drive has arrived. Take this opportunity to teach them to save for these necessary expenses such as gas or books needed for school.

Don’t forget to teach them the importance of interest. What it means to borrow money against a credit card and how quickly interest can add up.

The most important money lesson comes from modelled behaviour. It will be much easier for your teenager to become financially responsible if they see that you are!

Please visit our Prudent Financial facebook fan pages for a lot more valuable information on managing money and more at www.facebook.com/prudentfinancial.