Guest post by Paul McGuire, Parenting and Personal Finance Coach, Affluent Student
There is an incredible amount of valuable content on this site from some great writers and financial experts on how to teach your teens to handle money.
There are basically three things you can do with money – spend it, save it, and give it away. At the core, our teens need to understand this premise. We get into trouble in handling our money when we don’t do an intentional job of balancing these categories.
Usually the trouble isn’t over-saving or over-giving – it’s over-spending. One of the reasons for this is that we are the most marketed to society in the world. According to data released by Google, the United States receives nearly a quarter of all display ad impressions over the internet. Those ads scream at us, and at our kids, to buy more stuff.
If we aren’t careful, our kids will go and do just that. According to a study by Teenager Research Unlimited, 31.6 million teens in the US spent $155 billion dollars in 2000. That averages to $94 per week per teen of disposable income, and one can imagine that the numbers are even higher now.
Our kids buy in record amounts today because they seek instant gratification. They see something on television, on the internet, or on one of their friends and think that they need it now. This behavior stems from their parents’ behavior, unfortunately. We tend to do the same by financing our purchases through loans, credit cards, 90 days same as cash, or some other way that we can walk out of the store with the item we must have now.
Perhaps the most valuable lesson we can teach our children is contentment. How many things do they buy that they really need? If it’s a gadget or gizmo like a new phone, what is the marginal value of the features being added over the old product being replaced? What are the hidden costs of these new features? How likely are they to use these new features? Think about clothing. Yes, kids and teens grow and they need clothes that fit, but do they really need the brands and labels that they purchase? Or do they really have to have a closet full of clothes, a fully-loaded shoe rack, and a dresser bursting at the seams?
Stated another way, we should teach our children to find the value proposition in anything that they plan to purchase. I’m not insinuating that our children should go without, I’m proposing that they could do with less.
So as parents, what steps can we take to create a spirit of contentment in our homes? Here are a few steps that I propose:
1. Minimize and downsize. We all probably have too much stuff, so clean out your closets and attics and either have a yard sale or give to charity.
2. Discuss purchasing decisions with your teens, both the ones that they make as well as the ones that you are making. Talk through the rationale and reasons why to get to the root question “Is this a need or a want?” You just might talk them (or yourself) out of a purchase.
3. Serve and volunteer. Nothing drives home the fact that your home is blessed and has plenty than seeing the needs of others, and meeting those needs is our obligation to take care of one another.
4. Look for alternative solutions. Don’t simply default to the conventional wisdom of taking out a student loan, financing a car, or putting the vacation on a credit card. Establish savings goals and let the whole family in on your progress towards those goals.
5. Build your child’s self-esteem. This may not sound like a financial tactic but the better your child feels about themselves the less likely they are to seek gratification through things or status in their peer group.
“It’s not about how much you make, it’s about how much you keep.” Are you teaching your teens this extremely important lesson? More importantly, do they see it in your example?
Paul McGuire is the creator and curator of the Affluent Student where he provides parents with inspirational, informative, and educational content to enrich their children’s lives through proactive parenting. In addition to the website, you can connect with Paul on Twitter, at his Facebook Fan Page, or on Google Plus.