Teaching your kids to be financially responsible does not end when they begin their high school years. I began this year by asking you to Resolve to Teach Your Kids About Money and began my series on financial education for progressing age groups. The next installment, Teach Your Tweens and Teens about Money, gave more advanced instruction.
Parents, Your Job is Not Over.
As your kids move forward on their road to independence, the lessons build upon the foundation of principles you have helped them build -- and address the real-life situations and obstacles they will encounter.
Back to Those Allowance Jars
You got your children used to the Four-Jar Allowance System: Charity, Quick Cash, Medium-Term Savings and Long-Term Savings. But, just as your child has grown, so must the number of jars. It's time to add the fifth jar: Taxes.
No one gets to escape taxes, and your teens should get used to that fact. Just as your child put 10 percent off the top of the allowance into the Charity jar, now, another 15 percent goes directly into the Family Tax jar. You have taught them about sales tax and "why" of taxes -- it's time to face reality.
The funds in the "Family Tax Jar" are to be used for something the family agrees upon: pizza night, movie night, amusement park -- it's up to a democratic vote.
The Budget Matures
The goal is that you will eventually be turning over all the teen's expenditures to them and secondly, you will be formulating a precise, detailed budget for/with your teen.
This doesn't mean that they are going to quit school and get a job -- it means that the funds from your adult budget for clothing, car insurance and other expenses will gradually be turned over to the teenager to dispense (with your supervision). With the exception of shelter (your home), utilities and whatever meals are eaten at home, your mid-teen should be managing (with your financial help) everything else.
Speaking of Getting a Job
I understand that because of economic conditions, for some families, there may be no choice but for the child to contribute to the household income if possible. But, while I am a strong advocate of teens working a full-time summer job and even some weekend work during the school year, I don't believe that an after-school job is a good idea. Parents need to help your children balance work, school and time off.
Successfully managing their school time should be the main focus for our teens because the more education our children complete, the higher their lifetime average earnings will be.
We know that work is good and healthy, but it is not always good for our teens. If your teen is going work, be involved with your teen in the job choice. Be careful not to take on their responsibilities but it is up to you to discuss safety, training, location and schedule.
If your child does work, it is up to you to monitor your child's work environment and to keep tabs on school work. Confirm that grades don't suffer because your child is too tired from working and keep an eye on attendance. School comes first.
Keep Those Grades Up
Reinforcing the importance of education will have real, dollars and cents ramifications. In addition to instilling a good work ethic, good grades are not only necessary in order for your child to get accepted by the college of choice, but to help pay for it.
Let's face it: College and other post-high school education is expensive. But, schools are offering sizable amounts of aid based mostly on academic promise in order to bridge the loss of brighter students to less-expensive public colleges.
Merit aid is one of the most promising answers in college financing now. Students can be attracted to schools for any number of emotional reasons including the look of the campus, having a friend also attending or even the climate. Then the parents have to figure out how/if they can pay for it. Remember your budget. Put financial consideration high on your list when making the college "wish list." Be sure to include schools which offer substantial merit aid. Look at schools that will want you and be willing to help out.
Talk is Cheap, but Invaluable
Your high school teens will probably reach that period when they think they know more than you -- in fact, more than anyone. You need to continue the money dialogues and lessons. Include your kids in family money and budget discussions.
Give them room to grow and experiment, but monitor their money habits. Teach them to evaluate and make smart choices. Guide them to be smart consumers, routine savers, charitable donors and conscientious citizens. The language can be more adult and the lessons more complex, but you are setting your young adults up for success and financial independence.
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