How to teach your teens about money

Teach your children how to protect their online accounts and electronic gadgets against hacking and information theft. — Positive Parenting

Early financial education is important to equip your children with good money management skills before entering adulthood.

This may start when you first give them allowances or pocket money, or even earlier.

As they become teenagers, more facets of financial education need to be covered.

Here are some tips to raise a financially- savvy teen:

Budgeting

The first step is teaching them to spend within their limits.

Start with a regular allowance

Having a consistent income allows your teen to better understand their financial behaviours, and be more aware of their spending and budgetary limitations.

This will help them to manage their salaries when they start working.

Understand “needs” vs “wants”

Teach them how to differentiate between the two types of spending.

For example, a decent laptop to do their school projects is a need, but a top-of-the-line desktop with latest gaming features is a want.

Plan and track spending

Show them how to keep a record of all the money they receive and spend every day.

Suggest an easy and suitable way to track their spending, e.g. via apps or online tools.

It may be difficult in the beginning, but over time it will become a habit.

Discuss money matters openly

Include them in family conversations about money.

Explain the reasoning behind your financial decisions.

This way, they will be able to adopt it in their lives too.

Saving

This crucial habit should be inculcated into your children right from the very start.

Open an account

Help your teen to open a bank or savings account if they don’t have one yet.

Having their own bank account will give them a sense of independence and responsibility over their finances.

Focus on saving, not spending

Instead of highlighting material goals and achievements like houses, cars and gadgets, share your saving goals and money management strategy with your teen.

Make it a habit

Help your teen to save regularly.

There are many tips to save money that they can apply.

For example, a popular trend is to save any RM5 banknotes (or any other predetermined value) every time they receive one.

Protecting

In this day and age of prevalent online and data fraud, this is a particularly important skill and habit to have.

Beware of scams

Teach your teen how to detect scam attempts and alert them of the latest tricks used by scammers.

Tell them to inform you as soon as possible if they suspect anything suspicious.

Protect electronic gadgets from being hacked

Help them ensure their computers, tablets and smartphones are protected against viruses and malware, and that these protections are regularly updated.

Suggest ways that they can come up with strong, unique and memorable passwords to protect their online accounts.

Beware of identity theft

Tell them to be cautious when sharing/providing their personal details.

Don’t simply share sensitive details (e.g. MyKad number, passport details and bank account information) online or with any unknown third party.

These are just some basic tips to get your teen started on their personal financial journey.

When they are ready, you can also talk to them about other aspects of financial education, e.g. insurance, loans, credit cards, investments and taxes.

With these skills and knowledge, your teen will be prepared to face the “real world” in the future.

Dr Thiyagar Nadarajaw is a senior consultant paediatrician and adolescent medicine specialist. This article is courtesy of the Malaysian Paediatric Association’s Positive Parenting programme in collaboration with expert partners. For further information, please email [e-mail]. The information provided is for educational and communication purposes only, and it should not be construed as personal medical advice. Information published in this article is not intended to replace, supplant or augment a consultation with a health professional regarding the reader’s own medical care. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information.