Practical money management skills for teens – the #Easy way!

Nonhlanhla Kunene
By Nonhlanhla Kunene September 13, 2016 09:27

Practical money management skills for teens – the #Easy way!

The festive season is almost upon us, bringing with it a steadily increasing list of demands for the latest (and did I mention pricey) gadgets!

Perhaps in a moment of sheer helplessness you struck a self-defeating deal with your teenybopper. In an effort to get them to tidy their room (and keep it that way), you may have promised the latest PS whatever (lost count at two), hoverboard or whatever’s tickling their fancy these days. After all, the festive season wouldn’t be quite so festive without you blowing a fair amount of cash on a senseless device to keep them occupied.

Of course it seems like a fair amount, until a quick browse through the electronic gadgets section brings reality crashing back with the stark (and did I mention cardiac arrest-inducing) realisation that that senseless device will be costing you a cool R6k, at the very least. That plus the ridiculously priced games you’ll have to purchase over and above the actual console!

While there’s nothing wrong with spoiling them once in a while, catering to your children’s every whim can do them more harm than good in the long run. Getting them to realise that money doesn’t grow on trees (or that bank cards actually do run out of funds) can only stand them in good stead when it comes to the countless financial decisions they’ll be faced with later in life.

With managing your own finances being tricky enough, the thought of trying to get your kids on the same page can be nothing short of daunting.

No need to sweat though. To take some of the load of your shoulders, those cool folks at EasyEquities have put together a list of four practical and of course #easy, money management skills you can teach your children today!

Money handling skills the #fun way

Regardless of how much or little is coming in, at some point in life we all have to get a grip on our finances. Unfortunately a good number of us learn to do so only through a practical, and often unpleasant, experience which usually involves being up to our ears in debt. With 78% of household income in South Africa going towards debt repayment, the need for basic financial management skills has never been more evident.

Fortunately, with sites like The Mint and Biz Kidz, becoming money savvy needn’t be boring. Here teens can acquire valuable financial management skills through online games designed specifically with this goal in mind.

Decisions, decisions…

So he wants a pair of Yeezy Boost 350s? Set your teen on an early path to financial decision making by getting him to set some money goals – also known as budgeting.

Of course, in order for one to budget, you have to have money, so it may be a good idea at this point to bump up that monthly allowance. Whoa, hang on a second! Before you blow a fuse at the thought of throwing one more cent at your adolescent, read on; you’ll soon realise there’s a method behind the madness.

Bumping up your teen’s allowance not only allows you to take a back seat on certain purchasing decisions such as clothing and entertainment, it also forces your teen to evaluate his spending habits. They’ll learn to prioritise and differentiate between needs (some toiletries) and wants (those Yeezy 350s), and how to set practical financial goals to meet those needs and wants.

Get them going with that saving plan

No good financial goal is complete without a solid savings or investment plan to help you get there. Whether your teen has his eyes set on the latest iPhone 7 or has ambitions of becoming the next Warren Buffett, there is a financial product out there to help them get there.

Ask any financial guru what the trick to successful investing is, and they’ll tell you it’s not about how much or how little you can afford, but about time spent in the market. So whether your teen is able to put aside R100 or R5 is immaterial, the important thing is getting them to start saving and start early. And then it’s about being disciplined and consistent, which is why it’s often best to automate your savings so that the temptation to spend is kept at bay. One way to do this would be to set up a recurring investment, ensuring that a portion of that pocket money goes every month towards long-term goals instead of short term satisfactions.

Teach them that cash is king … at least when compared to debt

Bailing your teen out every time he runs out cash before his next “payday” is counterproductive. In the real world people who don’t learn to make do with what they have, either survive on noodles for the remainder of the month or, worse yet, fall into the vicious cycle of debt.

If you’re constantly having to rescue your teen financially, perhaps it’s time to stand your ground and learn to say no. Even better, you could offer the extra cash injection as a loan, which you then deduct from their future allowance. Nobody likes debit orders and they’ll soon get the hint, and with it, a good lesson on the negative effects of spending more than you have.

Nonhlanhla Kunene
By Nonhlanhla Kunene September 13, 2016 09:27
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