The teenage years are the perfect time to instil the real-world financial lessons adults need to know. Getting this right can save your child a whole lot of mental health issues later in life. It can also save you the stress of worrying about them. With that in mind, here are some tips on teaching teens finance.
Make sure they understand credit scoring
As a minimum, your teenager needs to understand that their credit score can influence a lot more than their ability to get credit. For example, it can factor into whether or not they are accepted for a rental property or if they get a job.
This means that they need to keep checking who is doing credit scoring and what system they are using. Then they need to do whatever they can to score well in that system. This can and sometimes does change over time and it’s important to be aware of those changes.
Teach them “price-per-use”
Brands are very well aware that young adults are often very susceptible to peer pressure, hence the use of “influencer marketing”. A straightforward way to combat this is to teach your teenager the concept of “price-per-use”. It’s very simple in both theory and practice. You take the cost of something and divide it by the number of uses it gets.
Encourage your teenager to estimate the price-per-use when they buy something. Then encourage them to track how much they actually use the item and hence what the real price-per-use turns out to be. Chances are, they’ll soon learn the difference between making genuine investment purchases and buying “trend” items.
Teach them to assess quality
If you want your teenager to buy wisely, then you need to get them into the habit of assessing the quality of an item before they buy it. Jewellery is often a great place to start. Firstly, it’s often fairly easy to assess what’s high-quality jewellery and what’s not. Secondly, teenagers often like to buy it so you want to encourage and help them to find real investment pieces.
Again, once teenagers get to see (and feel) the difference between quality pieces such as Nomination links and fast-fashion jewellery, they’ll soon figure out which offers better value. You can reinforce the lesson by reminding them that higher-quality pieces tend to offer a better price-per-wear. They also tend to be more sustainable.
Teach them about “shopping what they have”
Help your teenager form the habit of checking what they have before they go out and buy anything new (or even pre-loved). This goes for everything from food to fashion to entertainment.
It’s very easy for possessions to get hidden away, whether that’s at the back of a cupboard or in a never-accessed folder in a drive. The longer they stay out of sight, the more likely they are to fall out of mind. Once they’re out of mind, it’s really easy to go out and buy something new when you already have something you could use.
This definitely isn’t unique to teenagers. If, however, you can train your teenager to avoid this mistake, you’ll be doing them a huge favour for the rest of their lives. Hopefully, it’ll also inspire you to lead by example!