Preparing your Child for Adulthood

By the time your child has reached her teenage years, you only have a small amount of time before she will be on her own, making her own decisions, and living her own life.   The teenage years are a time of exploring independence and preparing for adulthood and, as a parent, you can help your teenager develop skills that will carry her through her entire adult life.  These five tips will help your teenager learn to be a better financial manager:

1. Lead by example.

One of the best ways to show teens how to manage money is to lead by example.  If your teenager sees you struggling to remember to pay bills, or calls from bill collectors are disrupting her time on Facebook, she is not likely to set money management as a high priority when she is older.  If you want your teenager to be good at managing her money, you must be good at managing yours and set the example of how things should be done.  Pay your bills on time, keep your credit score high, and balance your checkbook regularly.  Set money aside in savings and cut costs when you can.  Although your child may not say anything (and a teenager is likely to be of few words), she will remember and is more likely to emulate those actions when she is on her own in a few short years.

2. Teach the basics.

It is amazing what is not taught in school these days.  While students may learn algebra and geometry in high school, they may not learn how to balance a checkbook, write a household budget, or apply for a mortgage.  Do not assume your teenager will be taught these skills in school.  Take the time to teach her at home.

Begin by teaching the skills of balancing a checkbook.  Some banks offer student checking accounts for free.  If you feel your child is responsible enough to manage a checking account, encourage her to start an account and then show her how to manage it.  Show her your household budget, and then help her develop one for herself where she sets aside money for gas, spending, clothing, savings, and other expenses.  Discuss the basics of financial management, including debt, credit scores, and mortgages.  Discourage debt and the use of credit cards.

3. Make your teenager responsible.

One of the best ways to put money management into practice is to make your child responsible for some part of money management in your household.  If you’re going to buy new clothes for school, give your daughter the cash and help her set out a budget as to how much she will allocate towards shoes, jeans, and socks.  Then take her shopping and help her keep within that budget.  When the budget is spent, it’s spent.

Encourage her to find a way to earn extra money, whether it be working at a local restaurant or providing a service such as babysitting or dog walking. 

You can also make your child responsible for her own cell phone bill, car insurance, and other items if she has the income.

4. Encourage saving.

Because your child is living with you, never again will she have such low living expenses.  After all, it’s not very often in your life you have a roof over your head and food to eat, and someone else foots the bill. Therefore, this is the time of her life when your teenager can save a large percentage of her income.  If she has a job or earns money through babysitting or other services, sit down with her and talk about saving.  If she has very little expenses, encourage her to save 50 percent or more of what she earns.

5. Let your teenager learn from mistakes.

There is no doubt that your teenager will make some money mistakes.  Everyone makes a financial blunder every now and then.  It is important though you not rush to the rescue every time your teenager makes a mistake.  Teach her how to budget her money and how to stay within that budget.  Don’t loan her money or bail her out every other week.  She needs to know that if she makes a mistake, she will be responsible for finding a way out.  While helping your child may solve a short-term problem, it creates a pattern of loaning/paying back, and it doesn’t teach her the skills she needs to know later in her life.

Teaching your teenager to save and prepare for the future is possible.  Even if she doesn’t appear as if she’s interested, keep trying.  The skills your teenager learns about money management when she is young will last a lifetime.