In a society where consumerism and instant gratification are the norm, it can be difficult to teach your teen to lead a frugal lifestyle. Frugality, though, is a practical way to save money as well as a crucial life skill that can assist your teen in achieving their objectives and aspirations. A parent's duty is to guide their children from an early age so that they can live a prosperous life.
1. Monitor Finances
Understanding where money is going is one of the first steps to living frugally. Encourage your teen to keep a record of their earnings and expenses in a notebook, spreadsheet, or app. They can use this information to see how much they make, spend, and save each month and to pinpoint areas where they can make savings or generate more income.
2. Spend Less, Save More
Frugality's fundamental tenet is to spend less than you make and save the difference. Teach your teen to set aside a portion of their income each month for savings. Additionally, you could show them how interest works and assist them in opening a savings account. Give examples of how saving for the future can help them with things like handling emergencies, paying for college, or buying a car.
3. Use Student Discounts
Teens and college students can receive discounts on a variety of goods and services, including books, movies, transportation, and dining, as one of the benefits of being a student. Teach your teen to make the most of these chances so they can save money on the things they like. In addition, parents can help their children find free or affordable activities in their local area, such as visiting museums, parks, or libraries.
4. Create a Budget
A budget is a plan that outlines a person's financial situation and how they intend to spend their money. Having a budget can help people to avoid overspending. Parents should teach their teens how to make a practical budget that includes necessary and optional spending as well as the income they have coming in, whether it's from an allowance, a part-time job, or occasional babysitting gigs. Then, help them review their budget regularly and make any necessary adjustments.
5. Set Financial Goals
Your teen may be inspired to save more and spend less if they have financial goals. Help your teen decide what they want to accomplish with their money: Maybe they want to buy something special, go on a trip, or give a donation to a worthy cause. Then, assist them in dividing up their goals into manageable chunks and assigning due dates to each part. For instance, if they want to buy a $300 laptop, they could set a goal to buy it in six months, then plan to set aside $50 each month for it.
6. Distinguish Between Wants and Needs
The ability to distinguish between wants and needs is one of the fundamental principles of frugality. Essentials for survival or well-being, such as food, water, shelter, medical care, and education, are examples of needs. Wants are things that are nice to have but not necessary, such as designer clothes, video games, or candy. Teach your teen to prioritize their needs over their wants and to think twice before buying something they don't really need.
7. Avoid Impulse Spending
Teenagers can be all too tempted to purchase things on a whim, especially if they have access to a credit card or an online account for shopping. Parents should emphasize to their children the risks of impulsive spending and how to avoid it. Encourage them to make and stick to a budget as one method of doing this. Another strategy is that whenever they're tempted to buy something, they should wait 24 hours before making the purchase. This gives them some time to consider whether the item is actually necessary and worth buying.
8. Let Them Pay Their Internet and Phone Bills
Allowing your teen to pay for some of their expenses, like their phone and Internet bills, is one of the best ways to teach them to live frugally. This will teach them the value of money and give them practice in handling the obligation of taking care of their finances. They will become more aware of the price of these services, too, and they may even look for ways to save money, a sound financial move.
Financial Literacy for Young Adults