3 Things We Should Teach Our Teens About Money
Money is intricately entwined in every aspect our lives, at every stage of our lives. So it stands to reason that we should be expertly trained in the skill of money management and financial decision making from an early age.
Yet because this isn’t for the most part taught in the current education system, we’re left to painfully bumble our way through these crucial decisions — with disastrous consequences.
It’s time to write a different narrative for our teens. Properly equipping them to make sound financial decisions is one of the most important things we can do as parents.
Of course there are a number of glaring contradictions here: Most of us aren’t trained in financial education ourselves, we really don’t have the time or the bandwidth to teach our teens about money in addition to everything else on our plate, and because of a well-documented occurrence called ‘proximity bias’, our teens don’t really listen to us.
None of that however, absolves us of this weighty responsibility of teaching our teens about money.
So while we should ensure that our teens get a proper financial education from a trusted and reputed professional, here are 3 things that we parents can do to help things along.
1. Normalize talking about money. In many cultures, this is considered taboo but it’s time to break out of these constraints. Women in particular are socialized to believe that they’re not good with money and that it’s unfeminine to talk about it. We need to put a hard stop to that.
It also helps enormously if both parents share the money talk responsibility, and that this isn’t just left to the dads, as is usually the case. This demonstrates to them that money isn’t solely a man’s domain.
We should talk about the financial decisions we’ve made both good and bad, so they can learn from our mistakes without paying the price. We could also get them involved in the family finances whether its planning a family holiday, buying a car or paying their school fees. Doing this will instill in them a healthy respect for the money we spend on them, while helping them understand the intricacies and emotions involved in financial decision making.
2. Help them cultivate a healthy money mindset. A money mindset is the way they think about money, their overriding attitude toward managing their finances.
Are they fearful? Embarrassed? Willfully ignorant? Or are they free from limiting beliefs, eager to learn and excited about the opportunities that lie ahead.
This oft-ignored aspect is a critical component of financially empowering our teenagers. As Tony Robbins says: Learning a new skill is 80% psychology and 20 % tactics.
The money mindset our teenagers have will drive how they make key financial decisions every day and has a huge impact on their ability to achieve their money goals.
3. Help them practice delayed gratification and impulse control. These two inextricably linked concepts underpin all teachings in personal finance and are essential for teens to master if they are to be fiscally responsible.
They are also hard lessons to teach, especially given our culture of instant gratification. Training our teens to resist temptation and hold out for a better reward in the future is a skill worth cultivating and not just for better finances. This skill of delaying gratification has shown to directly correlate to better academic performance, higher paying jobs, better health, and more successful relationships.
And this is a learned behavior, it’s not genetic or pre-determined so practice makes all the difference.
Impulse control is equally important to cultivate. Understanding what impulse buying is, why teens are so susceptible to it and how to control it is another key issue we need to talk to them about.
And again, this isn’t easy. Given the constant barrage of advertisements specifically targeting teenagers both online and off-line, peer pressure and the predatory marketing tactics used by companies, we have our work cut out for us.
But the earlier we start the easier it will and the higher dividends it will pay in the long run.
Learning to make smarter money decisions is a skill most adults wish they had learned when they were teenagers, because they are keenly aware of the massive difference this would’ve made to their lives. Let’s give our teenagers this edge, they’re sure to be forever grateful.