We all can recall a version of a piggy bank that we had growing up. I remember fiddling with the bottom, eager to see the flurry of coins that would spill out. I also recall having a toy cash register, and I was mesmerized by the variety of buttons and pinging noises. These are tangible experiences I can recall as a child. However, when it comes to teaching teens about money, it can be an intimidating task.
When asking a teen about finances, it’s doubtful that a specific example can as readily jump to mind. When growing up, we tend to stray from the piggy bank. Perhaps we moved to receiving an allowance, but did we truly understand the meaning behind it? Teaching money to a teenager and instilling these values can feel daunting. The good news is that there are different mechanisms you can use to foster financial responsibility and awareness.
Related: 8 money apps for kids to help teach them about money management
So, years later when your child goes from teen to adult, they can refer back to these experiences and have concrete memories of ways in which they learned the value of a dollar. You may often wonder how to teach teens about money, so here are five simple steps that can get you started.
Tips for teaching teens about money
1. Consider a commission instead of an allowance
Allowance is the idea that a child will receive a payment regardless of whether work is done or not. Commission incentivises them more. For instance, you could set it up to where if your teenager does more chores or gets more A’s, their commission for the week or month will be higher.
2. Ditch the piggy bank for an actual bank account
Giving your teen a savings or checking account is a great way for them to expand their views of finances–and you can oversee their account as well (see the app Greenlight). You can take them to the bank with you and physically sit down with a banker to get an account set up, which is a great chance for them to interact with real world financial employees.
3. Get them interested in stocks
I remember when my dad helped me buy a few stocks at a young age. To this day, I still have some of those same stocks! You can help your teens purchase their first few, which not only serves as a great bonding activity as you both monitor the growth and changes, but furthermore, it will likely be a smart investment. The nice thing about stocks is that you can invest as little or as much as you like.
Related: 6 experts share how they teach their kids about money
4. Gift them a book about entrepreneurship
Perhaps you noticed that your child always had a knack for starting up a neighborhood lemonade stand. Consider gifting them one of these books about entrepreneurship to teach them about what it means to start a business:
Take your teens to a local food pantry or somewhere else where they can lend their time and services. One way of better understanding finances is through socioeconomics. It’s important to instill the idea of charity and to understand that one can save money while also finding ways of giving back—like volunteering within their community.
Though instilling financial skills in your teenager can feel like a challenging task, it’s important to know that even if you try just one of these techniques, it could result in positive changes for your adolescent. Whether they attempt to learn the ins and outs of the stock market or simply gain a new perspective for completing chores, providing your teen with these learning opportunities plants the seed for their financial awareness to grow. And who knows, perhaps even you will learning something along the way, too!
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