When parents are asked what skills are important for their teenagers to master before those students head off to college, parents understandably first mention academic skill. They may go on to list other attributes: self and time management skills, determination and commitment. But one that is often left off that list is money management. Yet young adults that know how to budget, save, prioritize and keep track of their expenses are more likely to make their college experience a success. Teaching such skills, however, can be difficult for many parents because so many adults are not good money managers themselves.
It is never too early to start training a child about money—and maybe yourself in the process. Parents can start teaching children as young as four or five to budget during a vacation or during an outing to a favorite store. As a child ages, parents can insist that part of that allowance goes to savings, a part toward charity and the rest is for the child’s discretionary spending. By the time that child reaches the teen years, one of the best tools for teaching money management is to put that teenager on a budget. First decide who will pay for what—school clothes, athletic wear, shoes, underclothes, winter coats, movie tickets, cosmetics, eating out with friends, etc. Once you decide what you will pay for, research average prices. What do you think is reasonable to pay for jeans? For t-shirts? For hoodies? For flip-flops? Based on your research, come up with a monthly figure you think is reasonable. It takes training, time and repetition to teach kids how to budget, handle credit and understand bank accounts. Have your teenager sit down with you when you pay your monthly household bills. Show your teen the breakdown: mortgage or rent, utilities, garbage collection, cable and Internet costs, landline and cell phone costs, medical costs, and all those “unexpected.” Show your teenager gas and grocery receipts to see how much those necessities cost you each month. Then pull out your credit card bill. Whether you pay it all off every month or just a portion, have your teenager calculate the interest and late-payment penalties—those extra costs usually shock.
Another great money management training time is when teenagers land a summer job. Encourage your teen to look for and apply for a summer job—it is a valuable experience to go through the process of looking and applying for a job even if the applicant is not successful. If your teen is successful, have him save some of his earnings for whatever he does after high school, reminding him that he will be responsible for all or many of his own expenses once he leaves home. If your teen wants to continue her job part-time during the school year, be ready with another set of expectations. Make it clear that school comes first and that the number of hours and the job itself will be re-evaluated regularly to make sure she is able to keep up with her schoolwork and any other activities she deems important.
If parents can achieve teaching these skills while their teenager is living at home, it will be a much smoother transition when that young adult goes on to college or whatever he does after high school. The college student that already understands what expenses he is responsible for, can live within his budget and can avoid the pitfalls of overspending, will reduce his stress and anxiety, allowing him to focus on succeeding academically.
This blog was provided by Carol Jones, Freelance Writer & Editor as well as the author of the book “Toward College Success – Is Your Teenager Ready, Willing and Able?” Carol Jones was a guest on College Smart Radio “Tackling the Runaway Costs of College,” on March 2nd, 2013. Listen to this broadcast on YouTube here.
Photo Credit: Shane Global Language Centres