Teaching Your Teens About Money Management

By Marte Cliff

Teens have a language of their own, and it often doesn't correspond to ours. For instance, they don't seem to know that "need" and "want" are not synonyms. They actually believe that if they want it, they need it. This is especially true if it's a cool gadget and someone else they know has one.
If you've been teaching them about money from the time they were old enough to have preferences, then you probably won't have much trouble over money during the teen years, because they've learned that life means making choices. In fact, your ultra-responsible kids may be asking instead for permission to get a job so they can save up for something special.
But what if you haven't been talking about money management all along - and now you're faced with a child who throws tantrums because you won't fork over money every week for CD's, burgers and fries, gasoline, movies, and makeup?
First, you'll need to sit down with them and straighten out a few things.
Your child is not a guest. He's a valuable part of the family, but you and your spouse are not his or her servants. Therefore, your child must take on some responsibility around the house.
I don't recommend withholding the basics of life if chores aren't done, but I do recommend withholding cash. You work for your money, and should expect a helping hand with household duties if you are expected to share the bounty of your paid employment.
This isn't precisely the same as tying an allowance to chores - but yet it is. Because children need to learn that without work, there are no rewards. Once they've reached an age where they can contribute to the running of the household, letting them believe that they are entitled to a share of your paycheck just because they exist is doing them a disservice.
One reason our country is in such a mess right now is because we have so many millions of people who are taking without giving back. Don't let your kids even think about joining that group! Even if you can afford to support them for the rest of their lives, they need the self respect that comes from making a contribution.
Those non-producers may be getting something for nothing - but what they get carries a heavy burden of self-disrespect.
Household duties should be discussed - not handed down as an arbitrary verdict. Decide together which duties belong to your child, and when they must be done. Remember that they must have time for homework and some social life - but not an overabundance.
Then, once you come to an agreement, don't dictate how their money can be spent.
If you agree that certain personal items are to come out of that money, then don't go out and buy them yourself to allow your child more discretionary money. If he or she spends the money on something else and has to do without those personal items, then so be it. No one ever died from lack of after shave or mascara. You, after all, are supplying food, shelter, and a warm bed. I assume you're also supplying enough clothing to cover a body and keep it safe from the elements. The rest is just "wants."
If your child has shown responsibility in handling money so far, get him or her a checking account. Impress the importance of staying well within the balance and teach your child to balance the account the day the statement comes in. Explain that banks make mistakes too, so he or she needs to keep a careful eye on that account.
But... if the worst happens and your child gets overdrawn, don't rush to the rescue. Pay the overdraft fee, but then take it out of next week's spending money. Mistakes are fantastic teachers. And it is far better to learn them now while the numbers are small than to learn them later when your child is trying to build a credit rating.
Now is also the time to talk about credit scores and credit ratings. Get a copy of your own credit report and go over it with your child. Explain what the various entries mean.
If there are ways you could improve your scores then talk them over with your child and start working on it. When you see the improvement in a later credit report, talk that over as well.
This is a time for communication and education - so don't be secretive about money issues.
If you've misused your own credit, talk about it. Show your child the consequences of poor choices. If times are tight, talk about that too, and about things you're doing to conserve money. If the allowance has to be decreased, talk about the reasons why, and what has to happen before it can come back up.
If you've done well and have plenty of money in the bank, talk about the security that a bank account gives you. Discuss the things your family is able to do or have today because you were careful with money early on.
One more thing: Identity theft. Kids are often careless with personal information - leaving wallets and purses laying around or answering questions they shouldn't. So discuss the consequences of identity theft and the steps you all can take to prevent it.
Marte Cliff is a Freelance Copywriter and former Realtor. After helping hundreds of customers obtain home loans over the years, she fully understands the importance of protecting and building credit.
The recent surge in identity theft led her to research the subject and learn ways that consumers can protect themselves. Her new website: http://www.allcreditscoresnow.com offers articles and advice, as well as access to a free credit report with FICO scores.
Article Source: http://EzineArticles.com/?expert=Marte_Cliff