For teenagers, the temptation to spend money is always there. From gadgets and gaming to trendy outfits with matching sneakers, to hobbies and entertainment, it could be quite difficult for them to spend on what they really need.
Learning to make smart spending decisions could be difficult for teenagers who are just learning the phrase ‘money management’, especially since their world is filled with enticing ads for countless ‘cool’ things to buy.
To help them understand how to manage their money, you need to help them with the following:
#1: Differentiate Between Needs and Wants:
Giving some guidance on how to identify needs from wants can help them learn to make smart spending decisions without overspending. While understanding needs and wants can be easy for you as a parent, it might not be so easy for a teen who isn’t used to having necessary expenses yet.
Explaining to your teens that a gadget that would improve their academic performance in school is more of a need than a new game pad that is merely an upgrade to the one they already have now, would help them prioritize what to spend on and what not to spend on, until maybe a visiting uncle leaves them some extra cash.
#2: Learn How To Build a Budget:
As parents, you need to teach your teens the basic formula for building a budget. In order to do this in the most effective way, use your own budget to show them what you spend on, why and when. Define a budget as a list of goods or services to be paid for with a price to each item. Help them to know that when budgeting, the necessities like school fees, monthly grocery shopping, bill payments, medical check- ups and other necessities stay at the top of the list, while a new Ferragamo shoe, or vacation holiday stays at the bottom. This will help them better understand the difference between needs and wants.
Also, show them what income is spent on what or how you split your income to meet the various needs and wants. Ensure there is a price to every item to help them understand how you make decisions about what you can and can’t afford.
#3: Value Quality Over Quantity
As teens, they probably do not understand the quality and value of most things. They might consider buying two similar items they don’t need or necessarily want, simply because it comes at a giveaway price or it’s a buy-one-get-one-free promo. As adults, we are sometimes guilty of this too. We forfeit what we need, to buy more of what we don’t need just because it is cheaper at that moment.
When they understand that buying so many things they don’t need over one they really need is only a waste of money, they won’t jump in the line to get an item that they would not use.
They should also be taught not to forfeit one good item to get two of the same item but at a lesser value and quality, simply because having two is better than having one.
#4: Know How to Bargain
Most of the time, we learn how to bargain by watching our parents do it. But sometimes we overspend accidentally thinking we’ve got the best deal because we don’t know the value of the item. Help them understand that it starts by knowing the value of an item to be purchased and also by comparing the prices at different selling outlets.
For instance, before you purchase an item as a parent, you either ask of the price from someone that has that same item, and its worth relative to the price. Your teens might not be able to ask all these questions from their friends, but with your help, they could check the products online at different shopping outlets and read reviews on the quality, while comparing the prices, before heading out to buy