I read an article a few weeks ago where the author talked about how he had stumbled across an effective way to teach money skills to his teenage son. I say stumbled across because some of the best techniques most parents use are the ones they back into blindly, not the ones they carefully plan and execute. Those usually backfire. Anyway, back to the effective money management plan. This guy set up a bank account with a set amount of money and gave his son a debit card to take to summer camp with him. He figured he’d avoid the daily phone calls asking for money for a week or two, at least. Honestly, he thought the kid would blow through the money pretty quickly. Instead, when he picked his son up at the end of camp (I don’t remember how long he was gone), he asked about his bank balance and almost wrecked the car when the boy told him there was still money in the bank. The rest of the article expounded on the transformation of his formerly financially clueless son to a pretty shrewd money manager.
I like this idea and may steal it, um, I mean borrow it, for my 13 year old daughter. I have a few details to work out, such as how to fund the account, but I’ll get to those later. I think the key to this strategy is making sure the child is responsible for spending the money on real life needs, not just wants. My daughter likes to buy cookies at a cafe that operates in the dance studio where we practically live. If she has any extra money, that is her first choice for how to spend it. She is generous enough to include her sisters when she has the money, but that’s not the point. I think I’ll have her use the money on a clothing allowance or extracurricular activities. She has a group of friends in our co-op that get together about once a month. Those get-togethers always cost money, so maybe if she doesn’t have the money, she has to stay home. That would provide a crash course in prioritizing her spending.
Obviously, an older teen with a job would make an ideal candidate for this budgeting technique.
Yo, buddy. You got cash? You pay the pizza guy this time. Don’t forget the tip!
Ho, ho, ho, Santa. Buy your own Christmas gifts this year.
The teen years are a great time to learn money management skills. They’re not likely to file for bankruptcy. They won’t charge up a credit card in college that the parent is on the hook for. They will avoid having to move home in their thirties because they racked up so much debt and couldn’t hold a job.
Look at teaching budgeting and financial responsibility as an investment in their future, as well as yours. Unless, of course, you enjoy housing that dead weight in your golden years.