by Sun Meilan

Created on: April 12, 2010   Last Updated: June 07, 2011

Parents often shelter their children from the realities of life. It is a natural thing to want to do and, in general, is a good thing - at least up to a certain age. However, when children hit their teens, then there is a need for them to start taking responsibility for aspects of their life. One area that is particularly important for their future lives is financial planning. These are some things that teens need to know about financial planning. 

*Money doesn't grow on trees

Many teenagers don't appreciate the fact that money is not something that just magically appears. Parents and carers often have to work hard for what they have and, whereas many teens expect their parents to give them money, they need to learn that at some point, they are going to have to take responsibility for their own earnings. Starting out by having a part-time job, the proceeds of which then go towards their social life, clothes and treats, will do most teens a lot of good. 

*Necessities need to come before luxuries

Teenagers need to realise that there are certain things in life, probably things that they take for granted, that need to be put before others. This includes bills for water, electricity, gas, food, local taxes and other necessities. Until all these bills have been paid in full, money should not be released for other items. They may really want that computer game - but it is not something that should take precedence over more important things. 

*How to use a budget spreadsheet

Teaching your teens how to use a budget spreadsheet can stand them in good stead for the future. They will almost certainly learn to use one at some point or another, but the earlier you can start them using one, the better. Allow them to budget their pocket money to buy things they want; or you may want to consider giving them an allowance, with which they have to buy their own clothes and manage their social life expenses. 

*Taxes and their purpose

Explain to your teens that your salary doesn't just go on bills and other necessities, but you also need to pay a certain amount of money in taxes every month. This can obviously be a substantial amount of money, but your teenager probably won't realise this. Tell them approximately how the money is spent - or give them a research project to find out. This knowledge will help them appreciate that your money has to go a lot further than they think. 

*Debts can destroy lives

In today's economy, it is easy to borrow money from all sorts of places, including banks, building societies, friends, families and loan sharks. There are times, in the case of a mortgage for example, when this is necessary. However, getting into debt unnecessarily is never a good idea. Instill into your teens the fact that it can ruin your credit rating, causing all sorts of problems for you in the future. It can even destroy lives if the debt becomes very serious. 

It may be a struggle to educate teens about financial planning; nevertheless, it will stand them in good stead for the future and hopefully will reduce the risk of you having to bail them out of financial difficulties!

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