While childhood holds the answers to various emotional problems in later life, the financial dilemmas in teen years may not always spring from earlier years. While poor family dynamics could be one reason for such issues, there may be several other triggers for a teen’s aberrant behaviour when it comes to finances. You could, however, resolve these with patient handling of the child and the situation.
1. Higher spending & demands
As the teenager’s social life takes off and becomes more hectic in high school, so does the need for spending, be it on eating out, entertainment, hobbies, clothes, accessories or gadgets. If not checked in time, the demands can become overbearing and impossible to meet.
To avoid this situation, it is best to explain to the child as he steps into the teen years, about the limitations of your income, essential expenses, the need for budgeting and saving for goals. Give him a fixed amount every month and do not offer handouts if he runs short of funds before the end of the month. Show him how he can find part-time jobs or perform age-appropriate tasks at home if he wants to earn more.
Do not give in to the child’s emotional manipulation or pressure. Also, make sure you do not give your teenager a credit card, while a debit card should be given only if he shows responsible financial behaviour.
2. Peer pressure
The need to fit in with the gang and keep up with the latest trends dictated by friends can not only lead to financial but also psychological problems among teenagers. This can not only result in spending pressure but also be the onset of financially debilitating habits and addictions that can last well into adulthood.
To prevent this, don’t just keep a check on the circle of friends, but also help increase your child’s self-worth. Lead by example to show to the child that living within means is more important than trying to keep up with the Joneses, and that popularity doesn’t have to be dictated by money.
3. Lending to friends
Teens are often swayed by emotion and think nothing of offering unconditional financial help to friends, be it a small loan or even a large handout. Explain to the teen that he is responsible for his money and that you will not sponsor his generosity if the money is not returned by the friend. While encouraging the child to help people in need, make sure that he understands responsible behaviour by withholding his next allowance if he continues to lend money without getting it back.
4. Family dynamics
Remember that your financial behaviour, habits and attitudes will ultimately define your teenager’s money habits. So if you don’t want your teen to be a spendthrift, do not make impulsive purchases yourself. If you want him to save, show him how you are investing your salary before spending it. Discuss your financial problems with him in a way that he does not feel agitated, but is willing to pitch in to solve the problem. Finally, listen to your teen’s financial woes without brushing them off and solve them in a way that he learns better money management.
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All of us have been in a financial dilemma when it comes to relationships. How do you say no to a friend who wants you to invest in his new business venture? Should you take a loan from your married brother? Are you concerned about your wife’s impulse buying? If you have any such concerns that are hard to resolve, write to us at firstname.lastname@example.org with ‘Wealth Whines’ as the subject.
Disclaimer: The advice in this column is not from a licensed healthcare professional and should not be construed as psychological counselling, therapy or medical advice. ET Wealth and the writer will not be responsible for the outcome of the suggestions made in the column.