A helping hand: Five easy ways to improve your teenager's money skills
Financial literacy among teenagers in the UK is plummeting. Fortunately, it's relatively easy to improve your teenager's money management, despite them being surrounded by more consumerist pressures than you ever had to contend with while growing up.
1. Encourage Teenagers to Use Technology
The UK is going through a financial technology boom at the moment and there is a whole load of free, easy-to-use applications out there that can help you and your teenager to manage money.
One of our favourites is Monzo, an online bank with a really slick mobile app that enables you to save towards multiple goals and get real-time updates on your spending. Revolut and Starling Bank are also great options that offer similar features.
2. Be Frank About Cash
In the UK, we're a humble bunch who, perhaps unlike our American cousins, would rather shy away from talking about money when we can. Families don't need to discuss money over the dinner table every evening, but simple things like involving your teenager in family budgeting discussions letting your child know how much the weekly shop costs will go a long way - particularly when they are tempted to buy some overpriced tee-shirt.
3. Give Your Teenager Financial Responsibility
Unless teenagers feel a sense of ownership over the money in their own bank account, they're not likely to appreciate its value. Therefore, it's a good idea to ensure that your teenager has a bank account of their own from an early age. Seeing the numbers go up and down in their own bank account will likely lead them to reconsider that next extravagant purchase.
4. Let Teenagers Earn Their Money
Ultimately, we all make mistakes with our finances and subsequently develop better habits to avoid repeating those errors. We learn these lessons through experiencing the little sting that comes with parting with money that we have worked hard to earn.
This is why it is vital that your teen feels that they have earned that money, whether that’s in exchange for helping around the house, as a reward for good school grades, or through a part-time job. After all, gaining meaningful work and building workplace skills won't go amiss.
5. Set Up a Literal ‘Bank of Mum and Dad’
In the real world, it costs to borrow and pays to save. If you already give your teenager an allowance, you can easily recreate this at home. If your teen quickly burns through all of their monthly allowance or wages and comes back to you for a top up, lend it to them with interest.
This will incentivise them to budget and dis-incentivise them from asking you for money. On the other hand, why not reward them for savings towards their goals by paying them interest on their savings?