Aug 06, 2017 News
Teenagers’ lack of readiness to manage money
The U.S. President’s Advisory Council on Financial Literacy, set up to assist the American people in understanding financial matters and making informed financial decisions, and thereby contribute to financial stability stated that, “By almost any measure, today’s schoolchildren are ill equipped to understand personal finance and make their way in the modern world. Their rising debt and debt problems, along with their poor inclination to save, substantiate what the test scores show, most students still graduate from high school without any formal classroom education in personal finance.” It is my understanding that the same is true for Guyanese students.
So, the question is, “How to help teenagers manage their money?” Well, the literature indicates that teachers and parents both play an important role in shaping children’s financial behaviour and attitude towards money. However, as was discussed in an earlier article, in many schools financial literacy studies are lacking in the curriculum, so many teenagers rely on their parents to set the right example when it comes to managing finances.
It is not easy to talk to teenagers about money. A review of the literature determined that there are three areas where parents can help their children navigate the “tricky waters of personal finance.”
1. Give teenagers financial responsibility – Money Advice Service of the United Kingdom found that, “Just over half of 15-17-year olds who receive money on an ad-hoc basis keep track of their income and spending. Whereas almost two in three of those who receive a regular, fixed sum are aware of their financial incomings and outgoings.” So, providing teenagers with a regular, set amount of money and the responsibility for paying for something they want, gives them their first opportunity to practice how to stay within a budget. Part of the teaching of teenagers how to manage their finances must include setting a monthly budget. Parents must be strict with the money they give them and not bailing them out if they overspend. In fact, some experts suggested that, “Sharing your tales of woe can be a good way to highlight the dangers of poor money management.”
2. Set the right example – But parents must set the right example and teach teenagers the various benefits of budgeting and saving. A review of the literature determined that when it comes to managing finances, many teenagers mimic their parents’ behaviour. One way of setting the right example is by including your teenagers in some of your financial decisions, this teaches them how to develop budgets. Another valuable lesson is teaching your teenagers how to develop a “saving habit.” Learning about the importance of saving and buying things which you can afford is a very important part of adult life.
3. Help them manage their first wage – For teenagers, an exciting time is earning that first paycheck. But that first paycheck can also come with a lot of confusion, especially when it isn’t as big as your teen expected, so says Erin Lowry of H&R Block – Dollars and Sense. Therefore, parents must explain to their teenagers, gross income vs. net income. Gross is the amount earned based on your salary and the hours worked. Net is the actual take-home pay after taxes and other deductions. This is a great opportunity to put aside some time and talk to your teenagers about the importance of saving. This can be as simple as deciding to put aside a certain sum each month, or if they have a set goal, helping them make sure they reach it.
It’s never too early to start teaching your teenagers critical money management skills. Both teachers and parents must explain to teenagers that having a budget is a necessary part of responsible money management. Your teen can use paper, pencil and calculator or Microsoft Excel to create a budget. Some experts suggest that, “The best method is one that your teen is most enthusiastic about: you want to make the budget process as fun as possible so that your child has the motivation to stick with it over the long term.”
Next week we will discuss the seven principles of the millionaire next door. Thanks for all your comments and support. As usual, please send your comments or questions to [email protected]
Jul 24, 2021By Sean Devers Kaieteur News – When Shimron Hetymer twice failed his fitness tests and failed to produce the runs his obvious natural talent suggested he should due to his erratic...
Jul 24, 2021
Jul 24, 2021
Jul 24, 2021
Jul 24, 2021
Jul 23, 2021
Kaieteur News – The Guyana Human Rights Association (GHRA) has replied to my “constant banging,” that is, my consistent... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]