It is that time of the year when every month ushers in a new festival- Diwali, Christmas and finally the New year. With the holiday shopping season setting in, many of us will break out the holiday music and sip on our favourite beverage while making our list, then check it twice and look into this year’s holiday budget. While this is quite a daunting task for adults, it certainly becomes a lot more complicated when teens take it up, considering they majorly rely on their pocket money to meet personal expenses.
All of us, at some point in our lives, have wished to have learnt about the importance of saving money from a young age, haven’t we? Luckily for our current teenage population, financial literacy and understanding has become an integral aspect of their overall growth, making it a need of the hour. This trait becomes far more relevant during the holiday season.
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Parents can help children inculcate these habits from a young age to help them gain greater financial literacy and become financially responsible. Here are some easy tips to help teenagers manage their pocket money during the festive season.
Help them understand the difference between needs and wants
To help children understand the value of money, parents should discuss the difference between needs and wants as the very first step. They should be made aware that basics like food, clothing, shelter, healthcare, and education constitute needs as compared to material purchases such as a smartphone, bicycle, gadgets or even movie tickets, etc. which fall under the list of wants.
Encourage them to make their own money
It is a known fact that we realise the real value of money when it has been earned. Prior to the festive shopping kicking in, parents could look at fun yet task based activities for their children to earn some money. They could start by rewarding them for doing chores around the house. Such a simple approach could also motivate teenagers to explore internship opportunities whilst they are pursuing higher education. By earning their own money, teenagers gradually begin to understand the value of hard work, while learning how to earn, spend and save money wisely.
Tack expenditure
The concept of saving money is certainly a tad bit tougher for today’s generation which thrives on living a digital lifestyle. Come to think of it, we too realised the same during different phases of adulthood. To help them achieve their festive shopping targets, parents can begin by telling them to set a goal to keep them motivated to save money.
For example, if they want to buy a video game for INR 2,000, parents could help them break down their goal in terms of how much they have to save every week or month to be able to buy the game. Not only will it enable them to track their expenditure but also reach their goal faster.
Parents must act as their child’s creditor
Teenage children often tend to get impatient while saving and wish to reach their goal a lot sooner. However this is an ideal opportunity for parents to help them better understand the concept of borrowing and lending by acting as their creditor- by lending them money for their goal. In return the children learn essential saving skills whilst they return some share of the borrowed amount from their monthly allowance as an equated monthly installment.
Offer incentives/interest on their savings
Teenagers should be encouraged to save more by giving them incentives. One way of doing so is to match up a figure of their savings with a certain percentage which allows them to grasp the concept of incentives and interest. This skill is much needed especially as they enter adulthood and kickstart their working careers.
Place to save and store their money
Teens must be made to understand that saving isn’t limited to stashing cash. Keeping material demands in mind, parents should set up a savings account for them which can be easily accessed. Additionally, youth centric neobanks and pocket money apps which offer a digital savings account, digital wallets and contactless cards can be both opened and accessed from the convenience of one’s home. This generation is digital savvy and are most receptive to easy-to-use, intuitive, gamified, and education-powered banking experience.
Money management can play a balancing role between pre-festive and post-festive spending requirements. However, it’s important for parents to instil financial literacy amongst teens as an essential life skill and not look at it as a shortcut approach limiting only to the festive season.
— Authored by Mukund Rao, Co-Founder, muvin
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