Smart Money Spending Decisions for Your Teens

posted on Oct 2, 2018 |   82 likes

Differentiating Between Wants and Needs

For teenagers, the temptation to spend money is everywhere. From gadgets and gaming to trendy outfit with matching sneakers to hobbies and entertainment, it could be quite difficult for them to spend on what they really need.

Learning to make smart spending decisions could be difficult for teenagers who are just learning the phrase ‘money management’, especially since their world is filled with enticing ads for countless cool things to buy.

To help them understand how to manage their money, you need to help them with the following:

Differentiate between needs and want:

Giving some guidance on how to identify needs from wants can help them learn to make smart spending decisions without overspending. While understanding needs and wants can be easy for you as a parent, it might not be so easy for a teen who isn’t used to having necessary expenses yet.

Explaining to your teens that a gadget that would improve their academic performance in school is more of a need than a new game pad that is merely an upgrade to the one they already have now, would help them prioritize what to spend on and what not to spend on until maybe a visiting Uncle leaves them some extra cash.   

How to build a Budget:

As parents, you need to teach your teens the basic formula for building a budget. In order to do this in the most effective way, use your own budget to show them what you spend on, why and when. Define a budget as a list of goods or services to be paid for with a price on each item. Help them to know that when budgeting, the necessities like school fees, monthly grocery shopping, bill payments, medical check- ups and other necessities stays at the top of the list, while a new Ferragamo shoe, or vacation holiday stays at the bottom of the list. This would help them understand the difference between needs and wants.

Also, show them what the family income is spent on or how you split your income to meet the various needs and wants. Ensure there is a price on every item to help them understand how you make decisions about what you can and can’t afford at the moment.

The Importance of Quality over Quantity

As teens, they probably do not understand the quality and value of most things. As teens, they might consider buying two similar items they don’t need or necessarily want simply because it’s at a giveaway price or it’s a buy one get one free promo. As adults, we are sometimes guilty of this too. We forfeit what we need, to buy more of what we don’t need just because it is cheaper at that moment.

When they understand that buying so many things they don’t need over one thing they need is only a waste of money, they won’t jump in the line to get an item they would not use.

They should also be thought not to forfeit one good item to get two of the same item but at a lesser value and quality simply because having two is better than having one.

Teach them how to Bargain

Most of the time, we learn how to bargain by watching our parents bargain. But sometimes we overspend accidentally thinking we’ve got the best deal because we don’t know the value of the item. Help them understand that it starts by knowing the worth of an item to be purchase and also by varying the price at different selling outlets.

For instance, before you purchase an item as a parent, you either ask of the price from someone that has that same item, and the worth of the item compared to the price. For your teens, they might not be able to ask all these questions from their friends, but with your help, they could check the products online at different shopping outlets and read reviews on the quality of the item while comparing the price before heading out to buy the item.

Whatever method you use to explain to your kids, just ensure you keep it straightforward and simple. And if you need help with your personal finance you could click here to get help from Page Financials.