What does “managing your money” mean? Essentially, it means deciding what you want to do with your money, with the aim of making carefully considered decisions about your personal finances. Through saving and good budget management, you can help your teenager develop good financial management skills so he/she can make his/her plans a reality.
Does your teen have access to pocket money? Did granny give him some money, or does he get a weekly paycheque? If so, it’s time for a discussion about managing his personal finances!
To get your teen’s attention, we suggest you try talking about her passion, since every passion has a cost and requires budget planning. Do you know what she likes? Soccer? Fashion? Video games? How much does this passion cost? Talking to your teen about her passion will encourage her to take a hand in managing her money.
Saving is the accumulation of money for a major purchase or activity. Encourage your child to open a bank account so she can set up automatic transfers to deposit money on a regular basis.
Your teen needs to set a savings goal; this will be the motivator that will make her want to manage her money. Your teen’s passionate about mountain biking, but he broke his bike on his last ride? Buying a new bike could be his savings goal! You’ll see how much fun it is to watch your child plan how to save and spend his money. Give him a hand in choosing the bike, comparing costs and calculating how his savings mount up to determine when he’ll be able to buy his new bike.
Making a budget will go a long way toward helping your child figure out how much she can save toward her goal. After you work out her total monthly expenses, she’ll know how much more she has to save. If she has no expenses to cover, she can save 100% of her money.
A savings account will help your child accumulate money to achieve his financial goals. He can deposit his pocket money and money received as gifts. When your teen starts working, it’s a good idea to set up an automatic transfer from the current account to the savings account as soon as the first paycheque comes in. A good way to motivate your child is to name the account after what he’s saving for (for example, “mountain bike savings account”).
An emergency fund is a tool that will help your teen save for a rainy day. Open a second savings account called “emergency fund” and automatically transfer $20 or more from each paycheque into it. When you cut your finger, you need a band-aid; when you have an unexpected expense, you need an emergency fund!
Making a budget will help your teenager understand his financial habits and whether his income covers expenses. A budget sheet, a little addition and subtraction, and that’s all there is to it! Download the budget template to give your child a helping hand.
Using a credit card means managing your money perfectly. Your teenager needs to be a champion finance manager to use a credit card. You can get a credit card as soon as you reach the age of majority.
It’s important to make your child understand that a credit card provides access to money that doesn’t belong to him so that he can build a solid credit history. To avoid paying interest, which can range up to 21%, all credit card purchases have to be paid in full by the due date.
Your child is pursuing a post-secondary education and you want to start giving her money from your RESP? Prepare her for making informed financial choices so she can manage her educational assistance payments (EAPs). The tips presented in this article should help her manage those funds.
Living in an apartment to study physiotherapy, taking the train to school to earn a vocational diploma in refrigeration, working while studying for a bachelor’s degree in actuarial science ... Whatever your teen’s situation is, if you take the time to help him manage his educational assistance payments, you’ll have hours of fun talking about the future, the endless choices and the decisions to be made.
Remember, dear parents, helping your teenager manage money is not just an opportunity to spend some quality time with him/her; it’s also a legacy of financial education that you’re passing on to him/her during your lifetime.
Founder of Fric & fortune
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