If you do not teach your kids how to manage money, someone else will !
And I guess that’s not the risk you would like to take! Studying well, landing on a dream job, living pay-cheque to pay-cheque is quite obsolete-wise. This has been a particularly difficult year for each one of us to save. But all the same, to the extent you can, it helps to go over the lessons that can help your kids learn the skill in good times and bad. Saving money is a habit that takes time to build. While Adults are struggling to master it, how about starting to teach kids, to learn their own way?
As this is a post which I long-awaited to write, I found myself writing beyond the average length of my other articles and since I do not wish to compromise on any of the important tips by shortening the article, I have chosen to split the article to two parts.
This is Part-2 of “How to teach Money to Kids – The Conclusion” and Part-1 “How to teach Money to Kids – The Beginning” is here https://rushtalks.com/how-to-teach-money-to-your-child-part-1/
(Did that sound like sequels of Bahubali? 🙂 Well of course money is today’s Bahubali too!)
How to teach about money to Teenagers
Fast Forward >>>> Ages: 13+
With teenagers, converse the important concepts such as savings, budget, planning and goals as often as you could.
12. Teach them contentment.
Your teen kid probably spends a good chunk of their time staring at a mobile screen as they scroll through social media. And every second they are online they are seeing a highlight reel of their friends, family and even total strangers! It is the quickest way to bring on the comparison trap. You may hear things like;
“Dad, Rahul just received a new iPhone as his 14th birthday present, and here I am using the same old Android”
“Mom, Tejal got her dress designed from that expensive boutique of the town which is owned by an award-winning fashion designer, I want to do that too!”
Contentment starts in the heart. Let your teen know that their Android (though not the latest iPhone) is still good with a lot of features and offers extensive free apps for every need. And you can still get your daughter a beautiful birthday dress from a nice local boutique (picking a grand nice design out of the internet), without paying hefty charges to that famous designer, still paying a good tip for the local boutique designer.
13. Give them the responsibility of a bank account.
Open a simple savings bank account to your teenage kid. This takes money management to the next level and will hopefully prepare them for managing a much heftier account as they get older.
14. Act as their creditor.
One basic rule of saving is to not live beyond your means. If your teenager has something to buy and is being impatient about saving for it, becoming their creditor can help to teach a valuable lesson about saving. Say the kid wants to buy something that costs ₹ 5,000. You could lend them money and take repayment, with interest from the earnings you provide for their tasks. The lesson you teach here is that saving may mean delaying gratification longer, but the item they want to buy will end up costing less (that is without interest) if they wait.
15. Get them saving for college.
In India, the concept of saving for one’s own college is not so prevalent yet. The Indian parents take it as their responsibility to fund their kid’s education until graduation or even their Masters.
Know that there is no time like the present to have your teen start saving for college. Do they plan on working a summer job or weekend internship? Good! Take a portion of that and toss it in a college savings account. Your teen will feel like they have skin in the game as they contribute toward their education. Also, witness the confidence it builds in them to get into the mainstream workforce later. Thank me then.
16. Teach them the danger of credit cards.
As soon as your kid turns 18, they will get hounded by credit card offers- especially when they have their own mobile phone and they are in college. If you have not taught them why debt is a bad idea, they will become yet another credit card victim. Remember it is up to you to determine the right time you will teach them these principles.
17. Get them on a small budget.
Now that anyway teens are glued to their mobiles, get them active on simple budgeting apps. Now is the time to cultivate the habit of budgeting their income- no matter how small it is. They should learn the importance of making a plan for their money, save or spend strictly accordingly.
18. Introduce them to the magic of compound interest.
I know what you are thinking. You can barely get them to make their coffee, iron their clothes- how in the world are they supposed to become investment savvy? The earlier your teen starts investing, the better. Me and you, the GenY-millennials are already late.
Compound interest is a magical thing! Explain with numbers to your kid, introduce your teen to it at an early age, and they will get a head start on preparing for their future.
One such scheme in India which can make you understand the power of compounding is Public Provident Fund (Read more about PPF here https://rushtalks.com/ppf-public-provident-fund/ )
(1. You can even open it in the name of minor so your teen can start right away! )
(2. Also the minimum amount of deposit is just ₹500 per annum, so they need not worry about the need to start with any big money as investment)
19. Help them figure out how to make money.
When you think about it, teenagers have plenty of free time – Summer vacation, Dusshera holidays, Christmas break… If your teen wants some money (and who does not? 😉 ), then find them a small job or internships or encourage them to find one. Leverage your contacts and network to find them internships and see them grow with each experience.
20. Show them the taste of entrepreneurship.
Younger generations are more clever, vibrant and full of energy. You can channelize that to start-up their own business, how much ever small, failure or success, so that they understand the real deal of doing business and most importantly the skill to sell which is very very important.
You can write to me at rushtalkscontact@gmail.com for any help needed in this regard (as am an experienced entrepreneur and can bust some myths and speak of reality).
21. Introduce them to taxes.
Kids will often be surprised by the withholding on their first pay-cheque. What is CTC, gross salary and net salary? Explain the concept of taxes early on and their pay-cheque will meet their expectations.
Teach About Investing
Once they’ve mastered basic banking skills, encourage your kids to learn about the complexity of globalized markets. Explore the idea of stocks, mutual funds, savings accounts and real estate.
Teaching children about money at any age is going to take time on our part. It won’t always be easy, have patience. If you want them to know how to successfully manage their money when they get older, taking the time now will be worth it. Also remember, one of the best ways to teach your kids about handling money is to give them a chance to make some of their own!
