As parents, we strive to help our teenagers understand the importance of money management as they grow into adulthood. Money, although a taboo topic for some, is undeniably vital. It’s not only important to learn how to manage money, but also how to think about it, as these skills are interconnected. Preparing one child for college and another for driver’s training brings the subject of money into frequent family discussions. While our kids grasp the concept of saving, they need to learn other financial lessons. Here are key money mindset tips for teens to consider as they become independent adults.
Money Mindset Tip #1:
Make Sales Work for You
Don’t buy because something is on sale.
Sales can be tempting, and getting a good deal is always satisfying. However, don’t fall into the trap of buying something just because it’s on sale. Sales are designed to encourage spending, and it’s important to stick to your budget and avoid making impulsive purchases.
Purchasing an item merely because it’s on sale doesn’t translate into saving money; it’s unnecessary spending. Part of maturing involves learning to distinguish between a worthwhile deal and an unnecessary purchase.
A trivial, but everyday, example is grocery shopping for meat. I know if I send my husband to the grocery store to pick up a few items, he will come home with whatever meat is on sale. We may have a freezer full of protein to use, but the impulse to buy meat on sale is real. Each of us has our own impulses or deals we can’t resist. If you learn yours, you can start to distinguish between an impulse buy and a good deal.
Money-wise individuals understand that sales are strategically designed to encourage spending. Instead of succumbing to such marketing tactics, use sales to your advantage. This approach may require patience and a readiness to wait for the right sale that matches your planned purchases.
Remember, sales are a constant! President’s day, Fourth of July, back-to-school, Black Friday, buy one, get one – these are all reasons for a sale. Resisting the urge to splurge during sales and learning to use them to fit your budget requires mindfulness and self-discipline.
Money Mindset Tip #2:
What does it mean to be equitable with money?
Being equitable with money means ensuring fairness. It involves considering the needs and circumstances of different individuals and making financial decisions that take these differences into account. Financial equity is on this list, because as an adult it’s important to understand there are different ways to measure this. Please keep in mind, for the purpose of this article, I’m talking about personal finances and no one answer is right. When managing finances, there are times when there are multiple black and white scenarios.
Consider this example: a parent can support their child’s higher education costs. Should they (A) give each child what they need for school up to a set amount, or (B) give each child a fixed amount? Tuition costs can differ, meaning one child might end up with extra money. Should a parent adjust their support based on each child’s needs, or should they distribute funds equally? There are valid arguments for both approaches.
Here’s another scenario: when budgeting for Christmas gifts for children aged 8, 11, and 16, $200 can buy many more toys and clothes for the 8-year-old than the 16-year-old. But remember, the 16-year-old was once 8 and received less expensive gifts, and the 8-year-old will eventually want costlier items. By understanding these evolving needs and adjusting the budget accordingly, you can create a fairer gift-giving approach. But should you give based on need or a fixed dollar amount?
Consider a situation where a couple is learning to manage their finances. Some newlyweds set an amount of discretionary spending per paycheck. What if one spouse saves for big-ticket items and the other spends on social activities? Should you consider fair is fair as each chooses where to spend “their” money? Should they revise budgets to make socializing a separate category if they both go out? The amounts allocated to discretionary spending and socializing don’t have to be equal.
Managing personal finances often involves situations with no clear right answer. When these situations arise, do your best. Avoid rigid thinking—financial equity can take many forms. Find what feels comfortable for you.
Money Mindset Tip #3:
There will always be wants
If you gave me $1000, I could think of 1000 ways to spend it. Despite being comfortable living within our means, I still have desires. Having wants, hopes, and dreams is normal and healthy. The key is to recognize there will always be things to buy. Learn to be comfortable with not making immediate purchases.
Learn to differentiate between wants and needs. Essentials like food, clothing, and shelter are needs. A new smartphone, your 10th pair of jeans, a brand new car, or another digital video player skin is a want. Understanding this distinction is crucial for financial success. It will help prevent unnecessary spending.
Money Mindset Tip #4:
Understand budgeting and find a system that works for you.
This one seems like a no brainer, but there is a reason there are so many budgets to consider. There are many budgeting methods to consider. The envelope system, zero balance, pay yourself first, no-spend, the 50/30/20 budget, goal-based budget, spending cap budget are some.
As a parent, I found the goal-based budget to be a relatable way for my kids to learn about saving. Saving for a specific goal such as a computer for college or the latest video game console, teaches resistance to impulse purchases.
While saving for a specific goal is still valuable as an adult, especially for endeavors like vacations or major purchases, other budgeting systems may become more practical and relevant when monthly expenses include bills and essential needs like food.
Money Mindset tip #5:
Your self-worth is not attributed to your wealth!
Equating self-worth with wealth can be a dangerous mindset. Society thrives with a variety of people in diverse roles; not everyone wants to be a doctor or CEO. Your wealth or possessions don’t make you superior to others. Money simply make expenses like bills and vacations easier to handle. When money is tight, it’s difficult to avoid comparison.
Strive to know yourself.
Knowing yourself means understanding your values, passions, and life goals. It’s about recognizing both your strengths and weaknesses, your triggers and motivations. It involves reflecting on your emotional responses and understanding why you react the way you do. Learn to accept and love yourself for who you are. You will have a good life when you make decisions using your personal beliefs and goals.
Strive to be successful.
Successful here is achieving one’s goals or objectives. This can cover career, education, relationships, finances, or personal growth. Success is accomplishing something desired, planned, or attempted. And, it can change based on your values and goals.
Apply these attributes to your personal finances. Recognize your financial strengths and acknowledge your weaknesses. Strive to improve in areas where you’re weak and learn to be successful in what you need to know over time. Remember, your value as a person is not determined by your financial status.
Money Mindset Tip #6:
Wealth and financial security takes time.
Acquiring wealth is a process.
Most 24-year-olds can’t afford their living expenses plus all the latest fashions, extravagant vacations, and fancy coffees. Yet, this is the lifestyle often glamorized online. The notion that if you can’t keep up with this, you should strive to because you’re ‘worth it’, is misleading. Remember, your worth isn’t determined by your income.
If you understand your worth, you won’t fall for the “buy it, you’re worth it” fallacy. You’ll realize that financial security is a choice, much like exercise. Small sacrifices today can lead to sizeable benefits tomorrow.
Building wealth takes time.
Why I Want my Teens to Have a Healthy Money Mindset
Teaching teenagers about all aspects of money management is important. Learning to budget, invest, and the ins and outs of managing money are all important skills. Often overlook is to teach people about what their money mindsets are. Using these money mindset tips for teens can help. If people are mindful of their thoughts on money, money management will come. The two aspects of money management—the practical and theoretical or the why behind the what—will strengthen your teens understanding of money and help set them up to be wiser about money.
With Grace
Learning about money is constant. As kids grow from teens to adults, it’s important to guide them and show them grace if they make a mistake. They will have to deal with the consequences. Also know, they won’t always do it your way. That okay, too.
With Wit
Hopefully your kids, show a little wit when it comes to managing money. A little ingenuity can set them up for financial success.