According to the Personal Finance Education Group (PFEG), over half of British teenagers have been in debt by the time they are seventeen. There are plenty of things you can do now to make sure their finances don’t go off the rails the second that they control their own cash.
1. Give them pocket money. The average weekly pocket money received by children is £6.32. This teaches them about budgeting – as long as you don’t bail them out every time their pocket money runs out.
2. Encourage your Children to save, they can have a bank account from the age of seven, and some children’s regular savers are suitable up to 18. If you are encouraging your children in the savings habit, you could even offer to match their savings as they put funds away for big ticket items. Make sure you fill in an R85 form so that tax is not automatically deducted from their savings.
3. Explain the different types of borrowing. If you are applying for financial products, explain to your children how they work. The sooner they understand how interest racks up if you only pay the minimum payment on a credit card, for example, the better it will be. Tell them about store card offers when you are offered them when out shopping and explain the huge %age pitfalls that come with an attractive first-purchase discount.
4. Show them how to shop around internet sites are a great place to teach teenagers about money. If you shop online for groceries, show them how to use MySupermarket to check where the cheapest deals are.