In today’s age where consumerism is at an all-time high and it’s easier to spend money than it is to save, children and teens witness bad spending habits. Americans live in a world of “wants” and “I have to haves,” and the effect on the younger generations could be staggering if they are not taught about good financial practices.
Programs and financial planning classes may be available at your child’s school, or in your local community. It’s a good idea to enroll your children in a class to learn about spending habits. Aside from the basic lessons about money, it will put them in a situation with their peers. As a young person, it is easy to see a parent paying for groceries, toys, clothes and more without having to realize where those funds came from – that the money is from hard work and employment, as opposed to an unlimited source of money. It can be easier to learn a lesson with other teens instead of from a parent.
Visa has created its own program to help parents teach and monitor teen spending habits with a card called Visa Buxx. The card works and looks like a traditional Visa, except that the funds on the card come from a fund that parents set aside in a special account. Parents can load funds on to the card and track the spending online. The card also has special parental controls such as spending limits and a financial skills assessment test. The user of the card can sign online and set up account features like balance notifications and more, which can be sent as a text message to a cell phone.
However, the Visa Buxx card isn’t the only option. Parents can create a specific checking account with a debit card and monitor spending in a similar manner through online banking. Some more tips for teaching good spending habits include:
1. Don’t hide your household financial issues from your children – include them in discussions about money matters, and use current events in the economy as examples and lessons.
2. Help them through their own personal finances, such as a first job, saving for a car, college or another big purchase. Real-life events provide hands-on experience and can help them practice and prepare for the future, when mom and dad are no longer the bank or credit institution.
3. Teach them to use tools like checkbooks, savings accounts and credit cards. It’s easier to do this when they are under your supervision. Helping them to realize that credit cards are not an unlimited means of spending money now will help prevent large credit card payments and debt.
4. Put budget limits on items such as clothing, extracurricular activities or miscellaneous items. Having to save their own money to purchase a new video game or trendy pair of shoes will help instill the value of a dollar, especially when it is not coming out of your pocket.
5. Work with your child to make a budget for items that they want. Encourage them to save their allowance or earnings from a part-time job to put toward a savings account or purchase, and help them map out the plan to get there.