Turn your budding shopaholic into a careful consumer
Whether your teen gets his money from a job, an allowance, or gifts, he needs to start learning how to manage the tricky trio of earnings, expenses, and expectations. One big step toward accomplishing this is giving him control over some of his own financial responsibilities. Here’s how.
Start with a budget
- Sit with your teen and make a list of as many of his expenses as you can. Include clothing, movies, school trips, haircuts, personal care products, transportation, snacks and drinks that aren’t part of the family’s expenses, subscriptions, gifts, savings, donations….
- Work together to come up with a realistic estimate how much each of his expenses costs per month.
- Look at how much money he expects to earn each month.
Negotiate a plan
- With his budget in front of you, ask your teen which of his expenses he would like to take control of.
- Start slowly. The goal here is not to allocate every penny he earns toward an expense. You’re not trying to overwhelm him, but rather to help him feel confident and in control of his money. So if his monthly expenses total $200, start him off with responsibility for $40 or $50. Over time, you can increase the amount.
- Once you decide, commit to letting your teen call the shots. Discuss some parameters around purchases that include family rules and school policy. You may wish to be involved in their purchase selection process for higher-ticket items or school clothes/supplies. Then, once you’ve set out the rules, you let him take responsibility for making some of his own purchases. And look on the bright side, with his own money on the line, he’s likely to give some genuine thought to the purchase of those $100 running shoes. He may decide the shoes are totally worth it, but he’ll also realize that it’s going to take him an entire weekend of flipping burgers to pay for them.
- If you’re worried about his ability to make appropriate choices (or your ability to keep quiet about it), steer him away from taking charge of those prickly expenses rather than diluting the benefits of this strategy with too much parental involvement (aka nagging).
Give them a chance (or two) to make mistakes
Some teens may need a “probationary” period while adjusting to this new approach. You can set it up as a specific time frame, for example 2-3 months, or as a “Three Strikes, You’re Out” policy.
Suppose your 14-year-old uses his clothing budget to buy a t-shirt sporting an inappropriate logo. If he’s in his probationary period, you can give him the option of returning it to the store for an exchange or refund. If he buys something inappropriate after probation, you may decide that he forfeits the ability to return it. The item is now yours to do with as you please.
- As you’re watching television, discuss the role of advertising for the things your teen wants. Encourage her to decide for herself what she really wants.
- Give your teen a voice in family purchases. Seek his input if you’re shopping for a car or big-screen TV or embarking on a home improvement project. And include him in your own budgeting and negotiating discussions.
Consider bringing her with you the next time you meet with your banker, mortgage specialist, or financial advisor to discuss your RSPs, loans, investments, and especially RESPs.
TIP: If your teen is sceptical about this transfer of responsibility, explain that it’s simply a way of giving him control over how he spends his money. So now, instead of begging Mom for a subscription to Sports Illustrated, he’ll have the power and the permission to buy it for himself.
Article by Kris Wallace.
Kris Wallace is a mom and an award-winning writer with more than 15 years' experience writing about personal and family finances from her home in B.C.’s Okanagan Valley.