Does your teen have a never ending wish list of the latest games, electronics or fashion? Some teens find out rapidly the cost of everything and yet know the value of very little. There’s one school of thought that recommends giving teens a set allowance to give them the opportunity to learn how to manage money. There’s yet another school of thought that recommends having a set list of chores for the teen to complete in order to understand the value of work and financial reward. Unless your teen stands to inherit a substantial sum, work ethic and work skills should be paired with the developing respect for money and sound principals for money management. Follow these recommendations from the financial experts to help your teen begin to learn the value of money through old fashioned hard work.
This should absolutely be a collaborative process between you and your teen. If you’re only dictating the rules of an allowance program, you risk getting limited buy in and ownership from your teen. Discuss which chores should be included on a weekly basis. Have your teen make suggestions and respect his contributions. What should the allowance amount be? On which day will it be paid? Is payment to be in the form of cash or a transfer to their account? Will the full allowance be paid if only part of the chore list has been completed?
In order to encourage your teen to save a portion of their earnings, consider a matching program. For every dollar your teen saves you can either commitment to matching those savings dollar for dollar or opt to take advantage of the awesome savings offered by Groupon coupons and enjoy a gift card for the amount saved from American Express. Your teen can either make a purchase from his wish list with the gift card or elect to cash the gift card out and put it into a savings account. Remember, the decisions are to be made by your teen. If you hijack the process, you will be robbing your teen of a great learning opportunity that could have life -long impacts.