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Lately it seems as if my son has forgotten that money does not grow on trees. Although he gets a reasonable allowance and we cover all of his basic expenses, he never seems to have enough money to get to the end of the month. I have been giving him extra money when he runs out towards the end of the month, but I have recently learned that he has been lending money to friends and buying his girlfriend extravagant gifts. I know he can spend his allowance however he chooses, but I am concerned that he is not learning to manage his money responsibly.
Can you offer some teen-friendly advice about saving and budgeting?
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Perhaps sit down and discuss what he needs (and wants) to spend his money on each month. Similar to an adult working with a financial planner, you 2 can construct a written plan for his money so that he can stretch his dollars to the end of the month (or even better, save for future larger purchases).
Include a "slush" fund in his plan for the end-of-the-month purchases that seem to crop up.
Some financially savvy adults adopt an "envelope" system where money is set aside each week to cover the necessities. If he has 4 envelopes (one for each week of the month), he can visually see how much is allotted each week and hopefully budget a little better than in the past.
Another option is to have him "work" for additional money if he runs out before the end of the month. That way, he will grasp the adult concept of living within your means or having to earn more if you can't.
Kids have trouble grasping the idea that money does not grow on trees, and money in and money out need to be equal. These are essential concepts for all teens to master along the way.
My son is in his early teens. I am trying to help him become financially smart. Following are few strategies that I have used, you might consider using any of these for your son.
My son has a monthly allowance, but just to give him a concept of how it feels to earn by working, he gets to complete given house chores to earn a little extra money. Believe me he thinks twice when spending his hard earned money
I am trying to encourage him to make a monthly budget. It gives him a more tangible picture of his finances and he can make adjustments accordingly.
From a very early age my children know how important it is to have savings. They have always had their money boxes. I still encourage my son to put a certain amount of his allowance in his savings.
Last but not the least, children should learn to be thankful for what they have. Once they develop empathy and learn the importance of giving, they tend to waste less. I encourage my son to do voluntary work with charitable organizations. Such experiences inculcate a sense of responsibility in the teens.
I hope these strategies gave you some better idea. Best of luck
First, kudos to you for recognizing that you play an important role in helping your teenager learn how to manage their money wisely. Most teens come out of high school with very little, if any, knowledge about how to budget, what taxes mean, or how to make savings a priority.
Here are some of the things I did with my children, early on, and as a single mom, it has helped shaped their view on the importance of being wise spenders, and savers.
1. Help your son open a teen checking account and walk with him through an online learning tool so he understands the differences between credits and debits, available and actual balance. It seems when a teen can see in black and white the balance going up and down, they begin to think about "their" money differently. You will need to be disciplined if your son overdraws on his account and not bail him out. Learning the hard way is the best teacher.
2. Watch the video "The Marshmallow Test". This will help explain the science behind delayed gratification to your teen. This is one of the hardest lessons for teens to learn, as everything is instant for them now, EVERYTHING, and they see no need to wait if they want something. If you can help your son recognize the value in saving, not just for larger ticket items, but also for his future, it may help him feel more satisfaction in how he chooses to spend his money.
3. Insist, and I do mean insist, that your son walk through a basic money workbook. Find one geared toward his age and that covers topics like taxes, getting a job, bank accounts, saving for college, impulse buying, living during college, etc. This can be one of the best tools you provide for your teen, because knowledge is definitely power, especially when it comes to money.
And finally, recognize that every moment is a teachable one. Talk about billboards or commercials, and what they promise for "just $99.99" or whatever their amount is. Ask open-ended questions about why your son thinks one purchase he sees you making is better or worse than another one you could choose. Find those examples, in yours and his, everyday life where he can learn little lessons at a time, to have wisdom for a lifetime.
Good luck to you!!