The story about Waltham High School's Student Santa program prompted several readers to contact me about the importance of teaching kids guidelines for personal financial management. In particular, many spoke about how the teenage years are a critical time for practicing money management skills, before graduation and "real life" start to set in.
Personal finance isn't often part of the school curriculum these days. If you're a parent of a teen looking for some tips on how to teach your child smart money habits, here are a few ideas from Robbie and Julie Hyman, co-founders of the personal finance e-learning course Money Savvy Teen:
1. Teach your teens to “protect Monday Me”
Teens make money decisions without thinking about the consequences because the future seems abstract. Today is real to youngsters. They can feel it. And on most “todays,” they want to buy something.
So here’s a lesson to share with your children: when you spend frivolously today, you’re borrowing (even stealing) from a future today — and a future version of you. If you spend on Friday out of boredom, what happens Monday when you need that money for something important? "Friday Me" will have cheated "Monday Me."
In other words, when you spend foolishly, you create problems for yourself.
Your kids will remember this novel phrase, “Monday Me,” which in turn will help them remember the message. They’ll intuitively understand that four days from now they’ll still be “Me” — and they won’t want to take money from that person.
2. Teach your teens to “dodge the ad barrage”
Growing up in the digital age, teens are exposed to 4,500 advertising messages every day. And while in many ways they may be savvy about the messages that marketers throw at them, the ads are still helping to shape their spending habits.
Educate them about how advertising works so that they can learn how to separate entertainment from the sales messages. For example, show them how celebrity interviews on TV talk shows are often ads for their upcoming concerts or movies, or how designers will often give the outfits worn in magazines and at award shows to attract publicity.
Arm your children with this knowledge so they can spot the advertisers’ messages — and make informed decisions about when to spend or say, “No thanks. I’ll keep my money.”
3. Teach your teens to “avoid the spending rip current”
Young people often spend money out of boredom, a need to keep up with their peers, or for other emotional reasons.
Teach your children to ask themselves if they’re caught in a “spending rip current” — a never-ending cycle of buying new things in the hopes it will make them happy. Here are some questions that you can suggest your children ask themselves:
· Do I usually spend money as soon as I get it?
· Do I buy to keep up with my friends, or because of peer pressure?
· Do I buy because I’m bored, and going to the mall (or shopping online) is fun?
· Is it important to me that I’m the first to get the new cool thing?
· Have I ever bought something I knew I’d probably use only once?
If your children answer "yes" to a lot of these questions, chances are they are caught in a spending rip current. Suggest that they get into the habit of taking a moment before a purchase to consider their reasons for buying. This simple technique will help your children develop much better spending judgment — now and into adulthood.
The author is solely responsible for the content.