Money Management for Teens
“My 18-year-old son is driving me crazy. He has a great summer job and every penny he earns is spent on clothes, cell phone calls, and parties. I tried to encourage him to save part of his salary, but he refuses to let me. listen to me. How can I make you understand the importance of good money management?”
Talking to your teen about money management can be a thankless task. I remember my mother’s pleas several years ago when she tried to encourage me to save, and I remember her advice going in one ear and out the other. The good news is that at some point I saw the light, so there is always hope!
How can you get your teen to understand the importance of starting a savings and investment plan early? As with any communication problem with a reluctant listener, it is crucial to present your discussion from their point of view. If you try to push your ideals and tell him why you think saving is essential, he may turn you off like I did many years ago.
Let’s try to look at things from your teen’s perspective and imagine some of the reasons why you might not be willing to save right now. Next, let’s examine some alternatives that might persuade you to reconsider a savings plan.
1. You have no knowledge about saving.
The best time to teach children to save is when they are very young and impressionable. Once a child is able to understand the concept of money, the idea of saving something should be instilled in a way that is fun and easy to understand.
In your case, it is not too late to help your child learn how saving can improve his life. He may not be willing to save because he doesn’t really know much about the world of money. You have to make the investment come alive for him in ways a teenager can appreciate. For example, he may send you an email that introduces you to some websites that are great for learning about investing, such as http://www.investopedia.com. You can also download online biographies of successful young investors like the inventor of Yahoo.com and send them to them.
2. You think that saving will deprive you
Look again at the messages you have sent your child about saving and spending. Did she get used to hearing you say that she couldn’t get something because you couldn’t afford it? Did you give him money for Christmas instead of the toy he really wanted? You may have associated being thrifty and thrifty with an inability to have the finer things in life.
Remember that most children live for instant gratification. Now that you’re earning your own money, you might decide that you want to immediately enjoy your hard work. Show him that instead of depriving him of pleasure, an early savings plan can help him accumulate a lot of money that will give him many opportunities. For example, if you invest J$4,000 per month at a net interest rate of 5% and increase your savings amount by 10% per year, by the time you are 25 years old, you would have over half a million dollars! Search online for “savings calculator” to find a website where you can play with the numbers to see how much you can earn by investing.
3. You think saving is not fun
Let’s face it: Savings can feel like a chore if you don’t understand how to invest and it prevents you from getting the consumer goods you really want. In the fast-paced life of a teenager, saving can seem boring. How can we ‘enhance’ the investment plan?
If your child likes the idea of a challenge, why not give him a savings challenge? One option might be to see how quickly he can save to meet a specific goal. Tell him that he will match his savings if he reaches them in a certain amount of time. One of the rules of the game is that he will have to keep it intact for at least five years.
You can also teach him how to invest through the ‘Rich Dad’ board game, “Cash Flow 1013”. He and his friends can learn to invest in an exciting way. I have also seen it available in a few locations in Jamaica.
Keep in mind that despite all your best efforts, your child may not immediately follow your advice and start saving. However, at some point in the future, you will remember the motherly advice and start your investment plan, just like I did.
Copyright © 2006 Cherry Hanson Simpson