Monday, December 21st, 2015
If there’s one thing that every person will have in common or one aspect that connects all humans the world over, it is money. Okay, there could be other things, but we’re naturally going to focus on the subject of money. Teenagers are invariably ready to start fully grasping the concept of a world immersed in money matters.
If there’s one thing that every person will have in common or one aspect that connects all humans the world over, it is money. Okay, there could be other things, but we’re naturally going to focus on the subject of money. Teenagers are invariably ready to start fully grasping the concept of a world immersed in money matters. It was, it is, and it will be a fundamental aspect to their existence as it has been and will be for everyone past, present and future. There is no denying it and there is no escaping it. For those who have already introduced the realities of money to their children from a younger age will find broaching the topic to the temperamental minded wannabe adults ever so slightly easier. This shouldn’t discourage you if you have not yet begun teaching your children about money. Obviously, the idea of teaching teenagers anything seems terrifying only because it is. Teaching them to be responsible with their time, their lives and their possessions is a task so challenging it is any wonder people survive adolescence at all, let alone make it well enough to become anything like an adult and least of all financially competent. Approaching teenagers about money will be different than younger ages. They are ready to hear about for some of the more serious aspects and are ready to start adopting a more serious attitude towards finance.
For starters, discuss the history and origins of money – in an interesting way, of course. Research questions such as: when did people first start using money? Where did the monetary system begin? What was first used as money? How has money changed over the centuries and millennia? Once you’ve covered the basics of money and the history of money, you can begin discussing where the world of money is headed. Encourage your teen to ask questions and make predictions. What will the world economy be like in the future? Will we still use cash or bank cards, or will we all have implants with which we manage and use our money? You don’t need to make any of this like a history lesson they may begrudgingly endure at school. Show a genuine interest yourself and your children may very well adopt a similar mentality to the subject. Don’t be discouraged from discussing the local and global economy – including how governments are involvement. As South Africans in an unstable economy with a very uncertain future, talking about the country’s economic state is very important. Give them an idea of what they getting themselves into.
In your discussion, talk about jobs in finance and their importance. They may not want to enter the world of finance, but being aware of the roles and positions in that sector would prove to be extremely beneficial one way or another. They may be enticed into becoming a productive member of the financial world, from an entrepreneur to an accountant, or from an insurance broker to the minister of finance (for more than four days.) All respectable and rewarding professions. However, simply being aware of individuals and institutions in the financial world would make their affairs and relationships with said entities a great deal less intimidating. Don’t stop there though. Introduce the stock market and investing to their young and blossoming minds. If you need to, do the research yourself and don’t hold back in telling them about the stock market. Tell them the bad along with the good and help them to make informed and good decisions in the future. Discuss time and interest rates and the fluctuating nature of the local and global markets. Differentiate earned and unearned incomes by giving examples. You could have a child that has a complete knack for investing and stock market management and be budding a future billionaire world saviour.
Lest we forget, the world of money does not stop at your doorstep. Continue to discuss money matters regarding the home and the family and especially the children. Firstly, discuss wants versus needs and be sure to give examples. The activity of creating wants and needs posters and having the children use magazine and catalogue cut outs of day-to-day products to stick on the appropriate poster was a good one for teaching young minds about needs and wants. Maslow’s Hierarchy of Needs is a very important model to learn for any teenager and they should be coming to terms with the topic already, but reinforcing the concepts Maslow was trying to convey by using the subject of money will be positively beneficial to their financial education. Getting clued up on what Maslow was trying to teach will invariably be important lessons for adults who are unaware of the psychology Abraham Maslow studied and taught. Discuss family needs and wants using the family budget to demonstrate the difference and importance of knowing how to differentiate between the two and apply that knowledge to managing budgets. Discuss and demonstrate credit cards by involving your children in the exercise of using a credit card and then show them the intricacies and consequences to its use by going through monthly and weekly bank statements.
Do not be afraid to talk about education fees. Parents may fear making their children feel guilty or pressured by knowing what it costs for them to go to school. Like I said before, knowledge eases fears. If you are sincere and responsible about how you discuss the topics it won’t be harmful. Your goal should be installing gratitude and the motivation to work hard. Something you can begin to enforce is the idea that studying at a college or university when they are older can be seen as a job in which they are paid to get an education – that is if the fees are covered by the parents. Have them understand that getting a degree or diploma is like working a job. They must put in the hours of work and they in turn earn the cost of the education. Work out how much the fees amount to each month, each week and each day and together with your children, establish the amount of work that would be necessary to earn the amount being spent on the education. This will adjust their mind set to the work place and the reality of life beyond their student careers. Another beneficial mentality, or habit, to instil is the second-hand mentality. The idea that material possessions need not be first-hand or branded will help them through university life and beyond. There is no shame in shopping at markets and second-hand stores. Demonstrate this by taking your teenager shopping at a craft market or second-hand store and purchase something needed or wanted that would have cost more branded or brand new. And then demonstrate the benefits of using the cheaper option, but don’t forget to discuss the potential risks of second-hand items, for instance if they need a warranty but don’t offer it.
Saving sooner means money grows faster. This should be the words of inspiration parents use to encourage children to begin saving sooner rather than later. The habit of saving should be installed as early on as possible. Challenge your children to begin taking saving seriously as soon as possible. And consider rewarding them for their decision, but I’ll cover that idea closer to the end. We know very well by now that math is the most important skill set to have when entering the world of finances. Provide math problems with money as the theme and don’t let up. A once off or half-job won’t be as effective as you would like, but you should know this and won’t need me to tell you to keep up the activity as much as possible.
Small, part-time jobs can be introduced, if they have not been already. Get your children out there and get them comfortable with working conditions and working people. The hardest part of any job is adjusting to the work place and people with whom you work, so gaining as much experience as possible as soon as possible is only going to be beneficial. Ask friends of yours if they can accommodate your child, seek out opportunities for teenagers online or in the local newspaper ads. Encourage your children to turn their chores into jobs by offering to mow lawns, wash cars, baby sit younger children, etc. Whichever way you go about it, provided all parties are responsible, the benefits will become priceless. Work ethic, interpersonal skills, ambition and responsibility have the potential to develop from any kind of job performed by a teenager. With this challenge you can add to it the tax challenge. If your teenager has a job that pays tax, sit them down and go through all the details and aspects of paying tax, reclaiming tax money and, of course, the importance of paying tax along with the consequences of not paying tax. If your teenager does not need to pay tax, set up a tax system yourself. Charge them tax on money they earn, or money they are given if you like. You’ll need to sit them down and discuss with them the nature of tax as I mentioned above. Help them to understand what they are doing and to become comfortable with the habit of paying their taxes promptly and diligently. You can even offer them their tax back months later should the circumstances allow for it. This is all at your discretion. Every aspect is optional, but the reality is, the more they learn and know about how money really works, the better they will fare as adults when they are older.
Personal budget setting is a great challenge, but also an important one. Using their allowance, sit them down and guide them through the process of setting up a budget and leave them to manage it. Get them to list their needs and wants and then have them pay for certain day-to-day items. If their budget fails, avoid bailing them out and instead guide them through managing their failings. If it means they miss out on events or goods, so be it. Sometimes the lessons best learn are the harshest ones. All children are different and some may understand the consequences without having to experience them, while others need to learn the hard way and if so they sooner the better would be agreeable. Try using the clothing allowance budget challenge. Give them an allowance for their clothing and as I mentioned above, have them list their wants and needs before leaving them to manage their budget. If they blow it all on expensive sneakers instead of a pair of jeans and extra t-shirts they may have needed, let them suffer the consequences – within reason, for instance if they chose not to buy a jersey at the beginning of a blistery cold winter, don’t let them freeze to death – and where you can, guide them as they learn from their failings.
Games make for good challenges, even for teenagers. Pretend stock market investing may sound childish, but if you think about it, it really isn’t. Younger children may not grasp the stock market, but teenagers certainly can and this should be played on. To do this, you, as the parent, will need to get clued up on how the stock market operates so you may assist and play along. Set up a system and its conditions and work on it together with your teenager to demonstrate how it all works and use this opportunity to teach them about compounding. For parents less prepared to play Wall Street Wolf-Wall Street Wolf with their moody teenager, online games are a good bet to get the little adults interested in what they are learning. Sites, such as PraticalMoneySkills.com and Learn4Good.com, are good pages to visit and get your children into. There is enough to either to assist in your teenager’s learning of money matters while keeping them invested in what they are doing.
Books to consider for your teenagers are the following three, but as I’ve mentioned before, there are dozens to hundreds of books available that can contribute toward your children’s financial education, but as much as I don’t feel like writing about dozens and dozens of books, I’m sure you’re equally uninterested in reading about them all in one place. Googling books to read is as easy as ever and there really isn’t much to it, so I encourage you to look for the ones that may interest you or your teenagers.
Alright, Book One: The Complete Idiot’s Guide to Money for Teens by Susan Shelley. This book got a 5-star review from Amazon and here’s an editorial review from the back of the book: “Teens are targeted as consumers more and more. This gives them tremendous influence, but it also sets them up to be taken advantage of. “The Complete Idiot’s Guide to Money for Teens” teaches them how to get money, save and invest it, budget it, spend it wisely, and keep track of it. Whether they’re saving for their first car, trying to make sense of a checking account statement, or trying to establish a good credit history, this guide has solid information and teen-tested tips.”
Book Two, Money Matters for Teens by Larry Burkett, which got a 4-and-a-half-star rating. Well, apparently teens always want more money. This is probably very true. As a teenager there was always another event to participate in or another trend to be up to date with which cost money I demanded regularly. Teenagers, however, often do not know how to handle the money they do have. Some may interpret “often” as “always” and I wouldn’t argue that. We can allagree that parents need to educate teens on solid money management if they’re to exercise these habits as adults. In Money Matters for Teens, Larry Burkett addresses issues of specific concern for teens and teaches them the basics to help them prepare for financial independence. It has a religious undertone to it, I must warn you, but from all that the book withholds, valuable lessons can be learned none-the-less.
Book Three, The Complete Guide to Personal Finance: For Teenagers by Tamsen Butler, with a 4-star rating on Amazon is the last book I’ll go into. Tamsen Butler, in The Complete Guide to Personal Finance: For Teenagers (and College Students), seems to do the impossible. This book provides a proper education in personal finance in an entertaining and understandable manner. The purpose of this book is not to tell teenagers what to do, but to educate them on the various options and the possible results of one’s choices. It is comprehensive and user-friendly, and it is sprinkled with real-life anecdotes that illustrate each financial concept.
Affirmations count! Teaching your children about money is an unenviable task. Teaching teenagers about money should be institutionalized with serious professionals in charge of their financial education. Simply put, teaching any one of any age is a difficult task, so the first to be rewarded with affirmations are those attempting to teach young minds about money and finance. Just the effort of trying to teach children what you can is tremendous and amicable. More parents need to drop their fears and begin teaching the seemingly impossible as we enter a period of financial uncertainty in unpredictable economies. The world is vastly better off with parents and adults doing their best to educate their children. So, if you have started and are already teaching your children about money, give yourselves a pat on the back. Those thinking about teaching your children about money, think about patting yourselves on the back and get started. Oh, and well done for getting so far as to thinking about it. The first step is always the second hardest and the second step is always the hardest. Just do it!
On to the teenagers (or younger children for that matter), let them know that despite the mind-numbing and serious topics discussed and challenged with regards to learning about money, their efforts in trying to understand a fundamental but highly complex subject are appreciated and their progress noted and satisfying. It doesn’t really matter how well they grasp money and finance, kept up eagerness to learn or invested interest in the subject are important elements to their learn term education and life-long relationship with money and they should be celebrated or rewarded. Learning about money is a boring, harsh and scary thing to do. So, ease the severity of it by building up their confidence and comfort. Don’t dull down the lessons, perk up the learners and keep them motivated.
If you like, pay them for making good decisions. I recommend this because rewarding money knowledge with money just makes sense to me. If your teenager makes the bold decision to save or begin saving money, set up goals with them and if or when they are reached match their effort any way possible. If their goal was to save R1000, for instance, and they achieve it, offer them 25%, 50% or match it with 100% (whatever you want) for reaching their target. At the end of the day you want your children to both understand the world of money and to have an invested interest in it and their future financial well-being.
By Clinton Walker