The teen years are critical for preparing young adults to enter the real world, and it's never too late to teach these six money lessons.
- Earning money is essential. Teenagers must know they have to earn money to buy the things they need and want. My wife, Ann, and I have four boys, and we've given them as close to a real-world experience as possible. We posted "want ads" on the refrigerator for work around the house. We specified what we would pay for a particular job, like yard work, and exactly what was required. Almost always, we got a taker. Earning money teaches more than just financial concepts as teens learn to be diligent, responsible and hard working.
- There's no age restriction on generous giving. Instilling in teenagers the desire to be generous toward God's kingdom will return blessings (Proverbs 22:9). Through your own example, encourage them to give a portion of their earnings and gift money to God.
- A penny saved is one less to earn later. It's a simple concept — spend less than you make — yet it's the linchpin of financial freedom. Saving helps avoid debt by preparing for unexpected expenses, so it's imperative that we instill in teens the habit of saving part of their income. Help them set up an automatic system of saving, teaching them the benefits of delayed gratification and compound interest. As further incentive, Ann and I had a policy of matching every $100 our boys deposited in their savings accounts.
- Accounts do best when monitored. Long ago, livestock was regarded as money or wealth. Proverbs 27:23 says, "Be sure you know the condition of your flocks, give careful attention to your herds." Good advice then — good advice now. When teens start earning money, they need to learn to keep track of it. Set up joint checking and savings accounts (with parents) for them, and teach them to balance the accounts every month. Explain bank issues such as annual fees, overdraft charges and interest.
- A spending plan works best when carefully drafted and adhered to. Not many people like the word budget, so call it a "spending plan." Help your teens determine how much income they receive each month. Use an average, if that helps. Then set up categories for giving, saving and spending. Ann and I required our teens to save a minimum of 40 percent of their income. That left more than half to divide into additional categories for various spending and giving.
- Credit cards can be weapons of cash destruction. As soon as your teens reach age 18, credit card offers in their names will appear in the mail. You can't prevent your teens' exposure to credit cards, so make sure they are "credit-card-proof." Teach them about the danger of credit card debt. Encourage your college-age teens to wait until they're self-sufficient before applying for a credit card, and they should only use a credit card if they're confident they'll be able to pay the balance in full each month.
Chuck Bentley is CEO of Crown Financial Ministries, a nonprofit ministry that teaches biblical financial principles.
This article was recommended in the January/February 2013 issue of
Thriving Family magazine. Copyright © 2012 by Chuck Bentley.
Used by permission. ThrivingFamily.com.
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