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Teens and money
go hand-in-hand.
It’s from your wallet-to-their-wallet that you want to control.
Teens are
one of life’s challenges. Most teens want to test their parents on just
about everything. Maybe it’s in their job description. When it comes to
money, this group is a mighty force, spending over $100 billion a year! No
wonder advertising and PR firms spend mega millions to entice your kids to
their products.
You do your
kids, and yourself no favors when you hand money over at their asking. It’s
not uncommon for families to talk about the perils of not telling the truth,
stealing, drugs and sex. Yet, the majority are quite reluctant to talk
about money. It’s almost taboo, something that just isn’t proper to talk
about. These teens learn early about the Bank of Mom and Dad—one that has
unlimited hours. For some, unlimited funds.
At some
point, teens start pressuring for a car. Of course, they promise they will
pay for it and drive ultra safe. The odds are that if your teen is a son,
he will have an accident. Much lower odds for daughters—that’s why car
insurance for males under 25 years of age is so expensive. Where does the
money come from?—usually an after-school job.
With a job,
the odds now are that school grades will decline, alcohol and drug use begin
or increase, materialism rears its head (if it hasn’t already), and parental
authority begins to vaporize. With that said, let’s look at the pluses.
After-school jobs help teens to mature and prepare them for the outside
world. There is usually a sense of pride and an increase in self-esteem and
confidence. Good things to have in the backpack of life.
|
Your teen
is not perfect. Teens make mistakes, lots of them. When they do,
view it as an opportunity to discuss behavior and consequences. |
Collectively, teens earn billions of dollars every year. The question is,
do they also save billions? Nope. They outspend what they make by
approximately $5 billion a year. Where does the excess come from—you get
three guesses, only the first one counts—you, the Parent!
You can’t
help but wonder if a monster hasn’t been created. What correlation can be
expected between teens’ spending and saving behaviors and those they display
in adulthood, if they now outspend what they make by more than 5 1/2%? The
potential for indebtedness could be a financial back-breaker. It is,
therefore, critical that your teen has broadly based financial management
skills.
Time For
Action For Both of You
To find out
what your teens know about money management, duplicate the test below and
have them take it. But first, take the test yourself, giving the responses
you think they are likely to give. You will have some idea about the degree
of penetration your money counseling has had in their minds. Or, you will
have a goal that they know what’s below by the time they get ready to leave
the nest. Then, compare your teens’ answers with yours.
Teens
$mart-Money Savvy Quiz
|
1. |
Do you know how to open a checking account? |
Yes ____ |
No ____ |
|
2. |
Do you know how to balance a checkbook? |
Yes ____ |
No ____ |
|
3. |
Do you know how to open a savings account? |
Yes ____ |
No ____ |
|
4. |
Can you
name three types of savings programs, other than a passbook savings
account? |
Yes ____ |
No ____ |
|
5. |
Would you know how to stop payment on a check if you needed to? |
Yes ____ |
No ____ |
|
6. |
Do your outside earnings account for more than 15% of the total balance
in your savings account? |
Yes ____ |
No ____ |
|
7. |
When you run out of checks, do you know how to order more of them? |
Yes ____ |
No ____ |
|
8. |
Do you understand all the entries on monthly bank statements for both
checking and savings accounts? |
Yes ____ |
No ____ |
|
9. |
Do you know the difference between a bank, a savings and loan
institution, and a credit union? |
Yes ____ |
No ____ |
|
10. |
Do you know what interest rate is charged on the unpaid balance of your
credit card or on one of your parent’s credit cards? |
Yes ____ |
No ____ |
|
11. |
Have you been saving 10% to 25% of all money that you receive from
parents, gifts and outside jobs? |
Yes ____ |
No ____ |
|
12. |
Do you have money left over at the end of your pay period, either weekly
or monthly, after all your expenses have been paid? |
Yes ____ |
No ____ |
|
13. |
Do you know who to call if you lose a check book or a credit card? |
Yes ____ |
No ____ |
|
14. |
Do you know how to use an ATM card? |
Yes ____ |
No ____ |
|
15. |
Do you know how to get cash in an emergency — day, night or out of town? |
Yes ____ |
No ____ |
|
16. |
Could you make up a livable spending plan for yourself without your
parents’ assistance? |
Yes ____ |
No ____ |
|
17. |
Do you understand how to read a simple contract, such as the one found
on the back of a credit card application? |
Yes ____ |
No ____ |
|
18. |
Do you know how to get car insurance? |
Yes ____ |
No ____ |
|
19. |
Do you know what penalty or penalties are assessed when you make a late
payment on a credit card? |
Yes ____ |
No ____ |
|
20. |
Do you know what a credit report is and how to get a copy of yours? |
Yes ____ |
No ____ |
|
21. |
Savings accounts earn interest; do checking accounts? |
Yes ____ |
No ____ |
|
22. |
Do you buy on impulse? |
Yes ____ |
No ____ |
|
23. |
Do you know how and when to file federal and state tax returns? |
Yes ____ |
No ____ |
|
24. |
Do you know what an IRA is? |
Yes ____ |
No ____ |
|
25. |
Do you know what travelers checks are and how to get them? |
Yes ____ |
No ____ |
|
26. |
Do you know what a lease is and what the contract should contain? |
Yes ____ |
No ____ |
|
|
How To
Score: |
Give
every Yes answer 2 points. Give No answers 0 points
|
| If your
teen scores: |
|
| 40 to 52 points: |
Help him pack his bag,
he’s ready to leave home or perhaps even support you. |
| 25 to 39 points: |
He’s on his way, but
still needs input from you. He can read this book, so get him his own
copy. |
| 24 and below: |
You both need to wake up
fast, otherwise he will never be ready to leave home. You may have to
support him the rest of your life. Not a good idea. |
Next Up
Ask your
teen(s) if he wants to learn more about and how to use money and be a player
in the adult world. It will be a rare teen who turns you down.
- If your teen has a driver’s license, “hire” him or
her as your personal assistant for a long vacation period, summer is
ideal. This means that you are accompanied on various shopping
expeditions and errands—groceries, cleaners, dropping off and picking up
younger siblings, the vets, the bank—where ever you need to drive to
and/or write a check.
Not only can your teen chauffeur
you, he will pay for everything you normally do by writing your checks and
paying your bills. This includes mortgages or rent, taxes, insurance and
the like. You get to sign the checks. Initially, he will think this is
fun. After a while, it becomes a drag. Reasonable wage is the minimum
federal wage rate. If it’s higher in your state, then match it.
- Let your teens know how much money it takes to run
your household. Open up your check register or the money software program
you use on your computer. Have him make the entries for checks written
and items that get automatically withdrawn from you account. If your
income varies monthly, this is a perfect opportunity to discuss why you
need savings backup and a realistic Spending Plan.
When I did this with my teens,
they were stunned at the amount of money it took to run our household.
- Check out “Hot” career projections in national
magazines such as Business Week and U.S. News & World Report.
The Internet is a great resource to see what is topical—the home pages of
AOL, Yahoo, CNN, etc. commonly run workplace and career related articles.
- Your kids are on the Internet all the time—have them
do a Google search for opportunities and print out the results. Ask your
teen what kind of work sounds interesting. Discuss what various jobs pay
and what kind of education or training is required.
- If your teen is car bound, set some rules up.
Include financial and safety responsibilities. If your teen doesn’t hold
up her or his end of the bargain, privileges are suspended. Set up the
conditions for any suspension and reinstatement of privileges when the
driving license is first obtained.
- If your teen gets an after-school job, set up rules
to monitor behavior and grades. Any violations, a family talk is in
order. Set up a probation time-off. If grades or attitude don’t improve,
the consequence is that the job is terminated.
- If, and when, your teen gets a job for pay, make a
condition that a %age is set aside for savings. If money flows through
fingers like water, offer to be the “bank” and withhold an agreed upon
amount.
Your
Final Money $mart Tip
Teens are interested in money. They need to be taught
how to save and spend wisely. You’re the teacher.
# # #
Judith Briles holds
both an MBA and DBA. Prior to her career as a full time speaker and author,
she was a stockbroker with EF Hutton & Co. and headed her own
financial firm. She’s the author of 24 books including Money Smarts:
Personal Financial Success in 30 Days!, Smart Money Moves for Kids, The
Dollars and Sense of Divorce and The Confidence Factor..
Judith lives in Colorado. Her website is www.Briles.com and she can be
reached at Judith@Briles.com.
©2006 Judith Briles, All Rights Reserved |
