How to instill good financial habits in your teens
While many parents are working to educate their children, new research from M&S Money on over 3,000 under 18s suggests that some teens (14 - 18 years old) are not being given basic help on money matters by their parents.
Surprising information shortfall:
Indeed, teens who are closest to financial independence and need a good solid grounding in personal finance matters revealed that:
Almost one in five parents (19%) have never even discussed how they spend their money with their teens.
47% of parents have yet to help their child open a current account.
32% have yet to discuss how to budget or even describe what one is.
Savings is also not generally a topic of conversation with 21% never having discussed this important topic with their parents.
31% of parents yet to assist their child with opening a savings account.
M&S Money believes that rather than parents being unwilling to help children tackle personal financial issues, they are often either confused themselves or unsure as to what they should be discussing at which age.
Top tips for talking money with teens:
Therefore, to help parents, M&S Money has compiled the top tips on how to teach your teen about money:
1 Make Teens Responsible for Their Own Expenditure - Rather than paying for their mobile costs, provide them with an allowance and clearly outline how you expect them to be responsible for these bills in future. While it might be hard, don't give them additional funds unless it is an emergency as it means they will soon learn how overspending means they have to miss out.
2 Talk your Teen through the Household Budget - Finances can be very theoretical but sitting down with your teen and explaining the bills you need to pay and how you budget for these will make if far more real. It may also mean that they are more understanding when you say you can't afford to buy them new trainers.
3 Be Honest About Your Financial Mistakes - 20% of teens think that they will be able to manage their money better than their parents so make sure that they understand what mistakes you made so they can learn from them.
4 Explain the difference between good and bad debt - As your child grows up, they will be offered credit cards, store cards, overdrafts and mortgages. Each used sensibly can be very useful but if abused can cause real problems so explain to your teen how they work. Ensure that as part of this you touch on interest rates in general.
5 Help them to set up Savings and Current Accounts - Teens mature at different rates but by helping them to set up these accounts, you can allow them to learn to manage their finances in a safe environment. Talk them through all the information which comes with the account as not only will it instil the need to read financial documentation but also help them to understand the consequences of their actions.
Colin Kersley, Chief Executive of M&S Money commented: "Most parents spend a phenomenal amount of time and energy working to ensure that their children grow up to be well-rounded members of society. However, for some this does not include discussions about general money issues or explaining simple financial concepts. Today, you need a good working knowledge of money to ensure that you have a solid financial foundation so it is vitally important that parents step up to the challenge and address the issue."