One of the biggest gifts parents can give their kids is awareness about money: how it works and the basic things we need to do – regularly – through life to make the most of our hard earned cash.

Keeping it simple and teaching your teen that there aren’t any get-rich-quick-solutions – but rather that doing the basics well and consistently – is a solid place to start them on the road to savvy money management.

Getting a budget in place:
Sit down with your teen and get them to review their sources of income – allowance; part-time job etc – and their expenses including spending money and any regular savings they put away. Once the numbers are clear, get them to deduct their expenses from their income and take a bit of time talking about the numbers. Is there a surplus; is there a disproportionate amount being spent in certain areas; is there room to save or save more?

Bank accounts and structure:
With a clear idea of the budget and saving plan, show your teen different ways bank accounts can be set up to take the hassle (and risk) out of money going to the right places. At the simplest level it may be showing them how having a few different suffixes on their main account and setting up regular Automatic Payments to sweep money into various accounts can help them keep on track with their goals. At a more complex level, you might want to take the opportunity to talk about different saving vehicles such as Deposit Accounts, Bonds and other tools for medium to long term saving.

The power of comparison:
Shopping and all things about the retail sector can be an assault on the senses… especially for those who are new to purchasing things for themselves. There are a lot of online tools dedicated to helping the savvy shopper compare prices by brand and also by retailer. Pick a few examples and show your teen the benefit of researching prices and making decisions based on what is best for their budget.

Ready for credit?:
Depending on how advanced your teen is with their personal money management (i.e. managing a debit card and sticking to their saving plan), it might be time to introduce them to the world of credit. We all need to develop a credit history for the larger purchases in life, but how we are introduced to it can make a big difference to how well we make credit work for us (or against us).

For example, what will the total cost of the item be after paying it off at X per cent for X time? Is it is the best form of credit for that particular type of purchase? How does the interest rate compare? Is there any risk of not making the monthly repayment? What would the consequences of this be? What are the risks of no-interest, deferred payment credit options?

Credit is something that becomes part of life as an adult, but it is not something to be taken lightly. All too many young people have been lured by the sound of low weekly or monthly repayments into an interest trap which quickly becomes both different to get out of and a threat to their credit health later in life.

It’s all about freedom:
It’s really important that your teen does not view money and money management as a negative – that saving is a sacrifice and a chore. Getting good money behaviours in place is essentially about having control over and the ability to achieve what we want out of life. Teaching your teen the positives about money management is perhaps one of the most important lessons.

Pick some examples they can relate to and show them what your family has been able to achieve thorough money management to help them build a context and positive picture.


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