Parenting is a challenge, but parenting a teen can be downright difficult. As their homework and decision-making gets more complex, so do the conversations parents need to have with their growing kids. Topics like sex, drugs and alcohol are among the toughest for parents and teens to discuss, but surprisingly, money also makes the list of dreaded subjects for many parents. In fact, they often avoid the discussion and rarely get beyond negotiating an allowance or arguing over spending.
However, you can’t afford not having the conversation. Many of life’s best opportunities and most challenging responsibilities, such as paying for college, buying a car or home, budgeting, saving and using credit cards, require good money management skills. Without some knowledge of personal finance, these can also lead to some of life’s biggest stressors. Teaching teens about personal finances can set them on the right path for a strong financial future and help them minimize stress.
Dr. Brad Klontz, a financial psychologist who works with H&R Block Dollars & Sense to help increase teens’ financial fitness, says parents don’t need to be experts to teach their teens important financial lessons. “Kids learn more from what they see their parents do than what their parents say,” Klontz says. “Even if parents have made financial mistakes – and who hasn’t – it shouldn’t stop them from equipping their kids with guidance to avoid making similar mistakes.”
So where do you begin? Klontz urges parents to start with five simple tactics:
1. Fight the urge to give advice; just listen
Teens are accustomed to adults giving them advice and often tune their parents out. Instead of talking at them, get them talking. Start by asking your teen what he or she already knows. To jump start the conversation, ask open-ended questions such as:
* How do you think people get wealthy?
* What are your financial goals?
* What do you worry about regarding money?
2. If at first they don’t succeed … let them try, try again
Allow your kids to experiment, make mistakes and learn from their mistakes. For example, give them an allowance, but don’t bail them out if they run out of money. Kids will learn more by missing out on something because they didn’t save enough than they will if you give them the money or float them a loan. This lesson provides an opportunity to examine financial missteps objectively and come up with strategies for doing things differently in the future.
3. Tell your teen to think before buying
Advise teens to keep a list of things they need when shopping to avoid mindless spending on anything they find attractive. When they see something they want, encourage them to take a few deep breaths and ask themselves:
* Is this something I really need?
* Is it something I can afford?
* How will I use it and for how long?
Ask them to wait a day or a week before buying it. If they still want it, talk about a spending plan. Often we feel we “must have” something today, only to see that it doesn’t matter to us tomorrow.
4. Model healthy financial behaviors your teen can follow
Demonstrate saving to your teen by deciding on something you want to purchase as a family then involve your teen in budgeting and saving for it. For example, you may decide to save $100 every week, month or paycheck, toward the purchase of a new television. Set the money aside in a jar, or track the savings on a ledger your teen can see. As you’re saving, ask your teenager for help determining the right television for your family, monitoring for sales and researching where to buy it. When kids only see their parents buying, without saving and researching, what do you think they learn?
5. Talk to your teen’s school about efforts to reinforce financial lessons
Teens must be getting financial education at school, right? Not necessarily. According to the JumpStart Coalition for Personal Financial Literacy, only half of U.S. states require any formal personal finance education before high school graduation. Knowing school budgets are often a hurdle, H&R Block Dollars & Sense is offering $500,000 in free personal finance curriculum to help high schools nationwide teach personal finance. The interactive, simulation-based curriculum takes students through 18 real-life lessons on budgeting, credit scores, debt management, bill paying, taxes and more, so teens can make real-world choices without the real-world consequences. Through April 15, current grant applicants can be viewed online and anyone can cast a vote to help determine which schools receive curriculum. For more information or to help bring the curriculum to a school near you, visit www.hrblockdollarsandsense.com.
Teaching kids money basics is critical and may be easier than you think. Parents know they can’t protect their children forever, but by arming them with financial smarts, you can feel good knowing they have the groundwork they need to succeed.