Teaching your young teenager how to be accountable with their money, could be the greatest gift you give them. Having the right attitude towards money management, is a good way to get them started on the path to financial intelligence. If you missed it, please read the first part in the series here http://blog.standardbank.com/node/64946
Here are some tips to help get your teen money smart:
- Different types of income available Getting your teen to understand the difference between earned and unearned income may be the key to their money managament. Earned income are payments made to you for your services, like a salary and unearned income is any income that comes from investments and other sources such as: retirement benefits, dividends and interest etc.
- Teach them to spend smart It is vital to teach how best to spend money. Be practical by giving them some pocket money for helping around the house and help them build their saving and spending goals. This will help them understand the value of money.
- Teach your child saving for longer term goals. Before now, your child probably saved for short term goals but at this stage, encourage them to save by: offering to make-up what he or she has been able to save towards a goal; consider increasing your child’s allowance if he or she is too young to get a part-time job; praise them for showing responsibility when he or she reaches a financial goal and open up a savings account for your child. To find out more about Stanbic IBTC savings account, click here http://bit.ly/1dWGhMS.
- Financial terms Before they venture into the big world, understanding financial terms could be a great help. • Loan: money that you borrow from bank/ friends that is paid back with added interest. • Interest: an amount of money you have to pay back when you borrow money. • Investing: putting your money into assets like mutual funds so that the money can grow or gain interest.
- Evaluate opportunity cost together. Opportunity cost refers to the value of the alternative thing you could have done whenever you have to make a choice. It is important to help your child understand that money is finite and so it is vital they make the right decision when faced with various choices on what to spend their money on. Children will desire lots of different things but weighing the opportunity cost means they can make better decisions.
Working through these tips could help you raise a money smart child with a healthy attitude towards money. Share your savings tips with us, or reach out to us on Twitter: @StanbicIBTC or Facebook: fb.com/StanbicIBTC.