HOW TO TEACH TEENAGERS ABOUT MONEY (AGE 12-18)

Financial literacy is an essential parental responsibility. As we had discussed money education for kids at the age of 3-12 (Click here to read more), we are going to talk about the essential money education towards teenager from age 12-18.

At this age, they might be able to understand directly about finance. Parents should start introduce their teenage kids about a more difficult financial knowledge such as debts, tax and more. Although they might be taught in school, however they have to apply it in order to cultivate a habit.

What are the essential financial knowledge to teach your teenage kids?

1. Budgeting
According to research, 69% of Generation Z do not have a clear understanding about how much they should spend and save for their long term goals. In the other words, they do not know how to do budgeting.

Sharing the family budget to your kids can help them to understand about the key of financial concepts such as interest and taxes. Parents should show on the ways to allocate their fund at home. It is recommended to allocate at the ratio of 5:3:2 (Essentials, Spending and Savings).

They key of teaching budgeting is repetition. Show your kids on how to budget for a few months and it won't be too time-consuming.

2. Credits

The difference between learning credits on teenagers and kids is that they will have their own credit card. However, parents should have the transparency on the bills to avoid overspending.

Many think that this is a risky action. It will not be risky if parents keep the bill transparency for two reasons. First, to help protect their credit rating. Second, it is the best way to show them the impact of credit and fees, as well as showing them how quickly debt is created.

Also, make sure your kids understand about the concept of credit at this age before you give them one.

3. Saving mindset

As your kids grew into teenagers, their demand might increase as they had more exposure to the world. To fulfill these wishes, they will have to spend more money.

Foster a saving mindset to your teenagers. Cultivate a saving habit before they spend. Parents could help their teenagers to set up their first bank account instead of using piggy bank. Remember not to your own account in case they overdraft. Be a signer on the account so you can see their spending behavior.

This is a great opportunity to teach them how to reconcile their account, keep track of spending, and learn to save.

4. Understand the things that teens waste money on

Parents should understand what normally their teens waste money on. This is to limit the allowance or extra incentives given to them to avoid wasting on such things.

The first things that teens love to waste money on is fancy food and coffee. Nowadays, café have nice decoration and fancy look to attract consumers to spend in a overprice rate on normal food or coffee. Other than that, trendy clothes, shoes or cosmetics is no surprise too. It is normal for young kids to take their prides and show off with trendy outfit.

Other than expected wastage, things like trips, smartphones, accessories, video games or maybe expensive dates, is quite common to teenagers nowadays. Parents should know about it and limit their income accordingly.

Provide the best amount of money and advice is important for this money lesson.

5. Taxes

Although taxes might be quite unfamiliar to teenagers, however they should start to develop the basic ideas of taxes at this age.

Parents should start showing house bills or income tax bills to their teens. They should also introduce them about service tax and consumer tax (if applicable). Most importantly, teens have to understand about personal taxes that they might be encountering in the future.

Explaining and demonstration on the concept of taxes and application is important.

6. Hygienic

At this age, teens might start purchasing themselves. They will have high exposure to the outside world. Money transaction and human interaction is the main cause of the spreading of germs and viruses. You would not want your kids to get infected by infectious germs and viruses in the process of money education.