Today’s post is all about teaching teenagers about money – something I take very seriously as I want my two to leave home as well equipped as possible to deal with their money in the real world.
I’m not going to tell you that my two teenagers are particularly frugal or that they don’t crave the latest Xbox games or designer goods because they’re normal teenagers who want the nice things they see their friends with.
What I am going to tell you is how I’m teaching them Money and giving them what I hope to be the skills they need to manage their money in the real world when they don’t have the bank of mum and dad to fall back on.
So, here’s my five suggestions for teaching teenagers about money – I bet you disagree with at least one of them.
Make money management easy
We used to have GoHenry accounts for the kids which were amazing because I had control over when they could spend and I could set limits and see exactly what they were doing with their money using the parents app and the children’s app allows them to move money about and is very visual which they found really motivating.
We moved away from GoHenry recently as they wanted actual bank accounts. They decided that GoHenry was for younger children and they wanted what they perceived to be a more grown-up account.
I did quite a lot of research because I wanted an account that could grow with them as well as being suitable for them now. I also wanted a debit card and an app and website they could easily use. In the end, I went with Nationwide who we don’t bank with ourselves but they seemed very geared up to their needs as teenagers as well as offering all of the things we wanted for them out of an account.
They have the apps on their phone and have familiarised themselves with them and the website quite quickly and they love their new accounts. They were also able to open a second linked account that they can use to save money in and according to them, it’s easy to move money between the two accounts.
Their pocket money is paid into their accounts monthly on a set day by Standing Order so there’s no hassle at all having to pay anything in and honestly, I don’t think it could be any easier for them which is a great start when you’re teaching teenagers about money – honestly, the harder it is, the less likely they are to do get involved.
Give them enough to actually budget with
Disclaimer: I know not everyone can afford to do this or would even want to do this but it works for us.
I don’t personally think that a teenager can learn to budget unless they have enough funds available to them to actually budget properly with.
I want my two to have enough money to be able to budget their pocket money sensibly so they can afford to have fun with their friends, treat themselves to some of the things they want to buy as well as enough to save money for the big things they want and to be charitable when they can too.
So, on my payday every month, I have a Standing Order set up to transfer the child benefit money we get into their bank accounts which they then use to pay for the following through the month:
- Any trips out with friends.
- Food, drink and public transport costs for the trips out.
- Birthday presents for their friends (I help out with family gifts)
- Any non- essential clothes. Take jeans, for example, Miss Frugal likes TopShop jeans which are £40 plus so I tell her that where she needs them (not wants, needs) I will pay the cost of a basic pair of jeans so around £20 and she can pay any extra.
- Any other things she wants to buy.
- Phone top-ups over and above the agreed amount that I buy each month (the £15 Giff Gaff Goody Bag gives her more than enough data). She doesn’t have the option not to buy this if she goes over her allowance as I want her to always be able to get in touch so I have it set to auto-renew the goody bag if it runs out and I literally stand over her until she transfers the money to me.
I still pay for anything she needs rather than wants if that makes sense.
She can’t do or buy everything that she wants on that amount but it’s enough for her to enjoy life as a teenager while still having enough left to put to save.
Don’t make rules about how much they have to save or donate
I know lots of people will disagree with me on this one but I don’t have any rules about how much of their pocket money needs to be saved each month. Once the money is in their bank account then it’s theirs to do what they want with (to a certain degree anyway).
I feel like if I tell them they MUST save a set amount then they’re doing it because they have to and not because they want to or because it’s a sensible thing to do. I love the posts I see on Pinterest where children have three jars to put their money in – one to save, one to donate to charity and one to spend – and they’re a great idea but in reality, not a great way to teach money management in my opinion as there’s no option for the child not to save or not to donate. Obviously, that’s just my opinion though.
I do encourage them to save up though and make it as easy as possible for them to do it because anything that takes too much effort will usually get put off until a later date, by which time the money will more than likely be spent. They both have a savings account alongside their bank accounts that they can easily move money into and out of using the app that comes with their bank account.
If ever they’re saving for something big (Miss Frugal just bought herself the Apple Pencil to go with her iPad – waste of money in my eyes but I’ll get on to that in a minute) then I might top their savings up after a certain time to help them or give them ways they can earn a bit extra to help get to their target quicker.
I’ve just asked them how much is in their savings accounts right now and I’m pleased that they do both have a reasonable amount in there although neither of them is saving for anything special right now other than holiday spending money.
I also don’t want to make them donate but I encourage it and lead by example. I do a small shop every month specifically for the food bank and always make sure they know what I’m doing and come with me. Usually, they’ll add some extra things into the trolley that they’ll pay for without being asked or prompted – that to me is the way to encourage charity, not by telling someone they have to donate.
Let them make mistakes
It’s a fact that teenagers are influenced by the people they see around them, both in real life and online. Miss Frugal was once desperate for a makeup palette that all the stars used and that some of her friends had and could just about afford it with her pocket money (this was when she got £40 a month). She decided she was going to buy it and we discussed cheaper alternatives and the fact that spending her money on day 1 of the month would mean no money for a month but all she could think about was buying the makeup.
I thought that the more I tried to put her off, the more she’d want it so I told her it was her money and if she wanted to buy it then I wouldn’t stand in her way (whilst handing her my Boots Advantage Card so I could at least get the points) so she marched right over and bought it.
And she loved it, it was worth every penny to her but it was a long month until she got her next lot of pocket money. She missed out on a shopping trip with her friends and had to do extra jobs to earn the money to pay for a Birthday present for her friend. I think I gave in once that month and gave her some money to go to McDonalds after school with her friends because they were all going straight from school before going back to school to help at Parents Evening. The rest of the month though, I stood by the fact that she’d spent her money and needed to wait until payday like we all do.
I’m not saying she won’t ever make an expensive purchase again because I know she will but she learned her lesson and keeps enough in her savings account that she can dip into that where she needs to. This week she’s bought herself the Apple Pencil to go with her iPad which I personally think is a waste of money but she stood in the shop and checked her balance on the app, moved some over from her savings account and then made the decision to buy it (only after suggesting it was something we should buy as it was educational).
On the whole, I have the general mindset that although I’d like them to be sensible with their money, that needs to come by choice so I’m quite relaxed about what they buy as long as we’ve discussed any big purchases. I do have rules though – nothing can be bought online without speaking to me and no Xbox points can be bought as Master Frugal would have a blow out on them every month as soon as he got his money.
Teach them that money management isn’t all about money
As well as knowing how to budget and make sensible money decisions, it also helps massively if they have other life skills. Meal planning and cooking is a major one that will save them so much money over the years.
Both of my teenagers can cook but it’s about more than just that, it’s about them being able to plan a meal to a budget so we often do that together. They decide what to cook and we go shopping together for the ingredients – it NEVER fails to surprise them how much the ingredients cost though so we still have work to do there!
Encourage discussions about money
Ever since the kids were young enough to understand the concept of money and how much things cost we’ve involved them in financial decisions. The best example I have of this is that when it comes to the Summer Holidays, we usually have some extra money saved for days out and treats and we sit together before the start of the holidays and decide what ‘big’ days out we want to do together. We don’t plan down to the last penny but we tell the kids how much our Summer budget is and how much the various big days out that they fancy would cost and how much things like the cinema and ice skating cost and let them decide what we do. I can then split that across the holidays and make sure we put money aside for it.
I know that many of us think that the schools should be taking a role in teaching teenagers about money as part of the curriculum but even if they did, parents would still have a huge role to play and hopefully these tips will help you with your teenager.
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