Money Management for Teens

My 17 year-old son is driving me crazy. He has a part-time job and every cent he earns is spent on clothes, cell phone calls and parties. I’ve tried to encourage him to save some of his pay, but he refuses to listen to me. How can I get him to understand the importance of good money management?

Talking to your teenager about money management can be a thankless task. I remember my mother’s pleas several years ago as she tried to encourage me to save, and I recall that her advice went in one ear and out the other. The good news is that at some point I saw the light, so there’s always hope!

How can you get your teenager to grasp the importance of starting an early savings and investment plan? As with any other communication issue with a reluctant listener, it is crucial to present your discussion from his point of view. If you try to force your ideals and tell him why you think it’s essential to save, he might just tune you out as I did many years ago.

Let’s try to look at things from your teen’s perspective and imagine some of the reasons why he might be unwilling to save at this time. Then let’s examine some alternatives that would persuade him to reconsider a savings plan.

1. He has no knowledge about saving

The best time to teach children about savings is when they are very young and impressionable. Once a child is able to grasp the concept of money, the idea of saving some of it should be instilled in ways that are fun and easy to understand.

In your case, it’s not too late to help your son to learn how saving can improve his life. He may be unwilling to save because he doesn’t really know very much about the world of money. You need to make investing come alive to him in ways that a teenager can appreciate.

For example, you can send him an email that introduces him to some websites that are great for learning about investing, like www.younginvestor.com and www.investopedia.com. You can also download biographies on the internet about successful young investors like the inventor of Yahoo.com and forward to him.

2. He thinks saving will deprive him

Look back at the messages that you may have sent to your son about saving and spending. Did he get accustomed to hearing you say that he couldn’t get something because you couldn’t afford it? Did you give him money for Christmas instead of the toy that he really wanted? He may have associated being thrifty and saving with an inability to have the better things of life.

Remember that most children live for instant gratification. Now that he’s earning his own money, he might decide that he wants to immediately enjoy his hard work. Show him that instead of depriving him of pleasure, an early savings plan can help him to amass a lot of money that will give him many opportunities.

For example, if he invested J$4,000 monthly at a net interest rate of 5%, and increased his saving amount by 10% per year, by the time he is 25 years old he would have over half a million dollars! Search online for ‘savings calculator’ to find a website where he can play around with the figures to see how much he has to gain by investing.

3. He thinks saving isn’t fun

Let’s face it- savings can feel like a chore if you don’t understand investing and it’s preventing you from getting the consumer goodies that you really want. In a teenager’s fast-paced life, saving may seem boring. How can we ‘hype up’ the investment plan?

If your child likes the idea of a challenge, why not issue him a savings challenge?  One option could be to see how quickly he can save to reach a specific target. Tell him that you will match his savings if he reaches it within a particular time. One of the rules of the game is that he’ll have to keep it untouched for at least five years.

Bear in mind that despite all your best efforts, your son may not immediately follow your advice and start saving. However, sometime in the future he’ll remember the motherly advice and start his investment plan, just like I did.

© Cherryl Hanson Simpson

Cherryl is a financial columnist, consultant and coach. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl.

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